Tender preparation and planning (Public Construction – Guidance 3.1)

Effective date: 1 July 2018

Objective: To help Agencies in undertaking tender planning

Summary

Good preparation and planning are key elements of conducting an effective and efficient tender process and project delivery.

Think about tender planning as an activity directed at an outcome, rather than just completing a template.

The way the Directions and Instructions are applied is intended to be scalable, recognising the risk profile, nature and complexity of the procurement.

Consistent with the principle of scalability, the level of detail and extent of documentation should match the risk and complexity of the procurement.

This Guidance outlines key content that should be addressed and documented as part of tender planning and preparation. This will guide the tender process from tender development to contract award and also applies to project delivery and contract management.

Undertake appropriate planning process

There is no one-size-fits-all approach to tender preparation and planning. The amount of preparation required for individual projects will differ according to factors such as the scale and complexity of the project.

The focus of tender planning is to ensure that the following elements are considered at the appropriate time:

• identifying clear procurement objectives
• appropriate market sounding and engagement strategy
• tender strategy
• key dates and time periods during the tender process
• tender evaluation and evaluation process
• management of probity
• contract management
• governance and resourcing.

Tender preparation and planning should build on the:

• project plan or asset management strategy developed under the Asset Management and Accountability Framework
• procurement strategy and business case, where a project is subject to the Investment Lifecycle Guidelines.

This Guidance identifies a range of preparation and planning considerations and documents that may be developed. The nature and complexity of a procurement will indicate whether the response may be:

• a few lines in a project plan; or
• topic specific documents such as a procurement plan or contract management plan.

Appropriate records (see Auditable, transparent and accountable tender and contract management processes (Instruction 4.1.4) should be maintained to document the outcome of the tender preparation and planning process.

Uncomplicated projects

For straight forward projects, preparation and planning may follow the Agency’s standard documents and processes.

Complex and unique projects

For more complex projects, individualised and detailed preparation processes may be required, in addition to an Agency’s standard documents and processes.

Examples where more detailed planning may be required include:

• where a different Procurement Model is needed to deal with the individual features of a project
• a project of a scale not previously procured
• a sensitive project with an active stakeholder group
• an environmentally sensitive project that may require 'real option' decisions under certain circumstances.

Elements of tender planning and preparation

Identifying clear procurement objectives

Clear procurement objectives are fundamental to:

• defining what you are asking the market to provide
• assessing value-for-money.

Procurement objectives come from different documents depending on the characteristics of the project:

A project brief is usually developed to define the scope of the project. The project brief should also define:

• the objectives of the project
• the procurement objectives for the project
• project stakeholder requirements (including functional goals, performance, technical criteria and completion dates or term date requirements)
• any known constraints associated with the delivery of the project, for example public access requirements and availability of land.

Market analysis, market sounding and engagement strategy

Understanding the nature of the supplier market and developing a strategy for market engagement is important for ensuring competition and contestability. Consider the target market for the procurement and the best way to reach potential tender participants.

A forward procurement notice (see Forward notices (Guidance 5.1) is required for open and Selective Tenders. Include planning for the forward notice in the market engagement strategy.

The market engagement strategy should consider the characteristics of the project:

Purpose of the tender strategy

The tender strategy documents the:

• scope of works
• project staging and structuring including timing and interface risks
• tender approach
• form of invitation to tender.

The tender strategy:

• would normally be part of the broader procurement strategy
• is scalable
• may be based on standard tender strategies for particular types of procurements.

Key dates and time periods during the tender process

These Directions aim to reduce the burden on tender participants. One way to do this is through more efficient planning and managing of procurements. Tender participants need to understand when resources will be needed for a tender process and subsequently project delivery as part of their business planning.

Key dates and time periods that should be documented as part of the tender planning include the:

• time period for developing Tender Documentation, including site information, specifications, contract documents, and the tender evaluation plan
• dates for releasing notices and Tender Documentation to the market
• time period for tender participants to submit a response
• evaluation period
• time to obtain relevant approvals both internally and from other Agencies
• time required for the Agency to obtain any external approvals.

Tender planning and the timing of procurements will vary according to circumstances. Review the planned dates as the procurement progresses, but aim to work to the planned dates as much as possible.

Aim to adhere to time periods communicated to tender participants during:

• tender open periods
• tender evaluation periods.

Factors to consider when determining the time period for tender participants to submit a response are described in Tender open times (Guidance 3.5).

Tender evaluation process

Effective planning of the tender evaluation allows Agencies to:

• better link the evaluation criteria to the procurement objectives
• consider and plan how the evaluation criteria will be assessed
• consider the most efficient way to assess different stages of a multi-stage procurement and aim to avoid re-evaluating the same criteria
• determine the information needed to evaluate responses
• ensure information requested from tenderer participants is relevant for determining the outcome of the tender process (at the stage it is requested)
• plan the resources required to evaluate the tender submissions
• more efficient procurement outcomes, through targeted and relevant evaluation criteria, and fewer requests for unnecessary information.

The evaluation plan should describe:

• the evaluation criteria
• whether the evaluation criteria are mandatory or ranked
• information needed to assess the criteria
• how the evaluation process will be undertaken, such as tender staging or the use of shortlists
• the expected timeframe for the evaluation
• the resources required for the evaluation.

Evaluation criteria (Direction 3.7) requires the evaluation plan to be:

• substantially complete before the Tender Documentation is released; and
• finalised before the tender closing date.

The evaluation plan may take the form of:

Types of evaluation criteria are described in Evaluation criteria (Guidance 3.7).

Managing probity

Probity is a fundamental principle of Victorian Government procurement. Probity is addressed directly through the principles and requirements listed in:

• Guiding Principles (Guidance 1.2) – general procurement principles and more specific construction procurement principles
• Probity requirements (Direction 4.1) and Probity requirements (Instruction 4.1).

Probity is a relevant consideration for all procurement and should be actively considered throughout the process to address changing circumstances.

Probity planning should ensure the procurement strategy and plans can be implemented effectively. If a tender strategy requires collaboration with tender participants, probity planning should enable planned collaboration rather than inhibit it.

A probity plan must be prepared for projects:

• with an estimated value over $10 million (inclusive of GST)
• that are complex or otherwise high risk.

The content of a probity plan is described in Managing probity in Public Construction Procurement (Instruction 4.2).

Probity planning documentation may take the following forms:

Contract management

Contract management planning involves considering how the contract will be managed once it is in place. Early planning ensures that proper consideration is given to how the contract will be managed from the outset and not only following the award of the contract.

Contract management planning:

• should first occur during the procurement or project planning phase
• is usually refined during contract formation activities
• may continue throughout the period of the contract to reflect changing circumstances.

There is no standard form for contract management planning. Issues to consider include:

• background - the procurement process that led to the contract
• details of the contracting parties - information about both parties (the Agency and the supplier) and who is authorised to issue and respond to notices and initiate contract variations
• details of major stakeholders, noting the stakeholders’ reason for interest in this contract (note any intra-agency relationships)
• contract details summary - a summary of the information contained in the contract
• contract management strategy - the objective and methods or procedures to be followed and references to and location of any useful source documents
• document register- an up-to-date list of all relevant documents (including their purpose, current version/amendment status, location and a synopsis).

Contract management planning documentation may take the following forms:

Governance and resourcing

Consider governance and resourcing requirements throughout the delivery of a procurement process. Resourcing and skills requirements will change through the procurement phases.

Example

Different skills will be required for development of plans, tender documents and specifications; evaluation committees and contract negotiation; and contract management.

Governance and resource planning may take the following forms:

Useful resources

Efficiencies in Major Project Procurement Benchmarks for Efficient Procurement of Major Infrastructure, Volume 1 Benchmarks for Efficient Procurement of Major Infrastructure (Infrastructure Australia, June 2012)

Identifies efficiency benchmarks for best practice procurement of major infrastructure and describes timeframes for large-scale infrastructure projects.

Towards agreed expectations: Tender strategies to improve Design and Construct Infrastructure Delivery Outcomes (Commonwealth of Australia Department of Infrastructure and Transport, June 2012)

Describes tender strategies to improve Design and Construct infrastructure delivery outcomes.

National Framework for Traditional Contracting: The Guide Good Practice and Commercial Principles for Traditional Contracting (Department of Infrastructure and Regional Development, September 2015)

Describes strategies to engage the market in the most effective and efficient way.

National Framework for Traditional Contracting: Topic Specific Guide 1 Project Definition and Tendering (Department of Infrastructure and Regional Development, September 2015)

Identifies the principles and practices that support developing the project definition.

Market analysis and review - Goods and services procurement guide (Victorian Government Purchasing Board, 2015)

Outlines ways to assess the ability of the market to supply the works or services required in a procurement.

Investment Lifecycle Guidelines, Stage 2 Procurement (Department of Treasury and Finance, 2019)

Section 5.4 Tender Strategy discusses how to develop a tender strategy.

Investing under uncertainty Real options analysis technical supplement (Department of Treasury and Finance, 2018)

Discusses how to deal with procurements involving uncertainty – using real options.

Tools and support

The Practitioners Toolkit includes key documents, guidance and information about the Ministerial Directions and Instructions for public construction.

For further information about the Ministerial Directions and Instructions for public construction procurement, please contact the Construction Policy Team.