Construction Procurement Handbook

Glossary

A

Advertise

To publicise a procurement procedure for the award of a public contract.

Adjusted median boundary This is a figure of 85% of the Median Price used when identifying potential abnormally low tenders. This allows a bracket within which a bid may reasonably by considered to be in keeping with the other bids for the contract.

Abnormally low tender

A tender price which is less than the estimated value by a margin which requires explanation.

In particular, any tender that:

• Is more than 15% lower than the median price; and
• Exceeds the proximity margin, that is more than 1% lower than the lowest qualifying price;

Will be deemed to be potentially abnormally low, and will be excluded from the competition unless the tenderer satisfactorily explains the aspects that appear abnormally low.

Award

The point at which the client accepts a bidder’s offer to perform the contract.

B

Bidder

An individual or organisation which submits a tender in a public procurement procedure (see also Economic Operator)

Buildability

Assesses the compatibility of human ergonomics and technical ability with the sequencing and logistics associated with constructing the design on site.

Building Information Modelling (BIM)

BIM is a collaborative way of working that facilitates early contractor involvement, underpinned by the digital technologies which unlock more efficient methods of designing, creating and maintaining our assets.

Business case

The business case is a test of the viability of the project and contains the justification for the project including value for money and why it should be done now.

Buyer

The buyer is someone in a client organisation who is authorised to make purchases on its behalf.

C

Candidate

Individuals or organisations who have notified the client of their interest in being invited to tender in a public procurement process.

Challenge

A candidate or bidder’s notification of disagreement with the client’s decisions and/or conduct in a public procurement procedure.

Clarification

Information sought by one party from another in a public procurement process to ensure the bid is compliant and capable of acceptance.

Clients

The organisation which is buying the goods, services or works.

The client is rarely a single person, even on relatively small projects. Within the client, there are likely to be a number of groups and individuals with an interest in, or control over, the project.

Competitive dialogue

A formal procedure under The Public Contracts (Scotland) Regulations 2015. The Competitive dialogue procedure is a pre-qualification process. Short-listed candidates are invited to take part in a dialogue process during which the nature of the project may be discussed and possible solutions may be developed. When the dialogue process is complete, final tenders are invited.

Competitive procedure with negotiation

A formal procedure under The Public Contracts (Scotland) Regulations 2015. Under this procedure the contracting authority is able to negotiate with pre-qualified bidders, and is also able to negotiate the bid and terms of contract with the successful bidder.

Complexity

Characteristics of the procurement procedure and/or project particulars requiring specific time for consideration.

Consultants

Consultants are those individuals or companies providing construction services to a project. These include architects, project managers, engineers, cost consultants, surveyors acousticians etc. Consultants are distinct from contractors who are generally, in construction, the companies who build the asset.

The tasks might include:

• Providing advice on setting up and defining the project.
• Developing and co-ordinating the design.
• Preparing production information and tender documentation.

Contract administration.

Contract

A contract is a legally binding agreement between at least two parties creating obligations enforceable by law. A procurement contract sets out the details of what is being procured, from whom, and the rights and obligations of the parties involved. Legally binding contracts can be created by word of mouth, correspondence, or implied by the action of parties.

Contract management

The client's arrangements after contract award for ensuring contract performance.

Contract notice

The advertisement which invites bidders for a contract.

Contracting authorities

‘Contracting authorities’ is defined in Regulation 2(1) of the Public Contracts (Scotland) Regulations 2015 as the state, a regional or local authority, body governed by public law or association formed by one or more such authorities or bodies.

Contractors

Bidder awarded the public contract and obliged to perform the requirements. Also means individuals or firms whose purpose is to build or demolish.

Common procurement vocabulary (CPV)

Taxonomy of classification to standardise how contracting authorities convey procurement requirements across the EU.

Criteria

The standards of capacity and capability required by the client before tenders are invited/evaluated.

The criteria that are used to evaluate the compliance of market approach responses. These include measures to assess how well competing responses meet requirements and expectations such as criteria to shortlist or rank suppliers. All evaluation criteria must be clearly stated in tender documents.

D

Design

The plan for the construction of the physical object which will deliver the client's requirements.

Design and build

Design and build is a project delivery strategy used to deliver a project in which the design and construction services are contracted by a single entity known as the design–builder or design–build contractor

Design Quality

Design quality is a combination of functionality (how useful the facility is in achieving its purpose); impact (how well the facilities creates a sense of place: and build quality (performance of the completed facility).

Design quality is about much more than style or appearance – it incorporates the key requirements of the stakeholders, functionality, whole-life value in relation to maintenance, management and flexibility, health and safety, sustainability and environmental impact. It is not merely subjective; it can defined and measured.

E

Economic operator

Another term for an individual or company which may participate in a procurement. (see also Bidder or Tenderer)

Single Procurement Document (SPD)

The SPD contains questions used at the selection stage of a procurement exercise i.e. it allows buyers to ask questions to identify suitably qualified and experienced bidders for their procurement.

Evaluation

The process of marking candidates’ and bidders’ responses to the requirements at both selection and award stages.

Exclusion

Candidates and bidders can be excluded from participating in public procurement procedures if they fail to meet certain legislative requirements or others which are at the client’s discretion.

F

Form of contract

The agreement between client and contractor (or consultant) setting out respective rights, obligations and remedies relating to the purpose of the contract.

Framework

An agreement or other arrangement between one or more contracting authorities and one or more economic operators which establishes the terms (in particular the terms as to price and, where appropriate, quantity) under which the economic operator will enter into one or more contracts with a contracting authority in the period during which the framework agreement applies.

G

Gateway Review

A short, focused review of a programme or project carried out at key decision points in its lifecycle by a team of experienced practitioners, independent of the programme or project team.

Goods

Procurement categories are divided into goods, services and works. Goods (also known as supplies) are physical commodities which in construction terms may contribute to the construction of a built asset. In general terms they may include, eg, tables, chairs, computers, pencils etc, in construction they may be bricks, bags of sand, tins of paint etc. The Procurement Reform (Scotland) Act 2014: statutory guidance defines public supply contracts as "...contracts having as their object the purchase, lease, rental or hire-purchase, with or without an option to buy, of products. A public supply contract may include, as an incidental matter, siting and installation operations."

I

Innovation partnership

These partnerships are intended to enable clients to call for bids without pre-empting the solution where the requirement cannot be delivered by the current options available to the market.

Intelligent client

A client which has experience of and the necessary expertise to conceive, develop and deliver a construction project for the optimum combination of time, cost and quality.

M

Market

Where the client obtains goods, works and services that it cannot provide by itself.

Median Price

In identification of Abnormally Low Tenders the median price is the median of all the tender prices provided. That is, it is the price which represents the middle price of all the bids. For example, if there are five bids, £1,000, £1,200, £1,300, £1,400 and £1,500, the median price is £1,300.

MEAT

“Most economically advantageous tender”. All awards of regulated contracts should be made on this basis, it requires that the evaluation takes account of the quality and price of the tender against the requirement and not just the price or the quality.

O

Open procedure

A formal procedure under the Public Contracts (Scotland) Regulations 2015. The open procedure does not have a separate pre-qualification stage and allows any interested party to bid for the contract.

Outcomes

Objective benefits produced by the output of a construction project and the use of a built asset.

Outputs

Direct products of a project or organisation’s activities. For example, the built asset delivered by contract performance.

P

Prior information notice

A prior information notice (PIN) is a means of giving advance notice of forthcoming procurements.

Procedure

The technical manner in which a procurement is conducted often dictated by legislation.

Procurement

The process of buying goods, services and works from external suppliers. The procurement process begins when a need to buy something is identified and will generally end after the contract is awarded.

Procurement (Scotland) regulations 2016

Regulations which give effect to the Procurement Reform (Scotland) Act 2014.

Procurement journey

Guidance provided by Scottish Procurement on the procurement of goods and services.

Procurement Reform (Scotland) Act 2014

The Procurement Reform (Scotland) Act 2014 introduced duties on public bodies to consider how their procurements could be used to improve the wellbeing of their local areas, which included looking at the impact on the economic, social and environmental health of the area. It also sought to open procurement up to small businesses, the third sector, and supported businesses.

Procurement strategy

The plan for procurement of contracts which will deliver the built asset. This will cover all stages of the project, all natures of contract and how the market is to be engaged.

It is also the term used to describe the legislative requirement for a contracting authority to show how it intends to carry out regulated procurements.

Proximity margin

In abnormally low tender identification. The proximity margin shall be limited to a minimum value of £1,000 and a maximum value of £100,000.

Public bodies

A Scottish public body is an organisation for which either the Scottish Government or Scottish Parliament is responsible and with whom they have a direct relationship.

Public Contracts (Scotland) Regulations 2015

A set of rules and regulations that require competitive processes to be followed for contracts with estimated values exceeding the GPA threshold unless any relevant exclusions or exceptions apply.

Public Contracts Scotland

An online purchasing system for use by the public sector in Scotland

Q

Qualification

In a restricted procedure a bidder may qualify to be invited to tender.

Qualification may also refer to a proviso or caveat tabled by a bidder seeking to change the client’s requirements.

Quality

An objective measurement of performance against a national, international or an officially-recognised, sector-specific standard or benchmark. In procurement evaluation processes this is often combined with price and used as the basis for deciding which tenderer to award a contract to.

Quick Quote

An online system provided on Public Contract Scotland portal for taking low value and low risk contracts to market.

R

Regulated procurement

Any procurement whose estimated value is at or above the thresholds set out by reference to the Procurement Reform (Scotland) Act 2014

Requirement

What is to be delivered under a contract as set out in the contract documents.

Restricted procedure

A formal procedure under the Public Contracts (Scotland) Regulations 2015

Risk

Risk is an uncertain event or condition that can have a negative or positive impact on the output and outcomes of a project. Risk is generally assessed, quantified and either retained or allocated to the contractor/consultant.

S

Scottish Public Finance Manual

The Scottish Public Finance Manual (SPFM) is issued by Scottish Ministers as applicable guidance to the Scottish Government (SG) and other relevant bodies on the financial and procedural governance for handling and reporting of public funds.

Scottish Capital Investment Manual (SCIM)

The Manual provides guidance on the cyclical process of project development from inception at the service planning stage, to post project evaluation of service benefits realised once a new building is occupied. The guidance not only covers issues around investment appraisal, financial (capital and revenue) affordability and procurement, but also the project management and governance arrangements required to support the development of such programmes and projects.

Selection

The process by which bidders’ capacity and capability is evaluated to determine whether or not they can be invited to bid or have their bids evaluated.

Self-cleanse

The process by which candidates which have been excluded from a procurement process can demonstrate that they have taken action to remedy areas which were the cause of their exclusion.

Senior Responsible Owner (SRO)

Owns the Business Case and is the primary risk owner

• Accountable for the effective identification, quantification, management and communication of benefits throughout the project
• Typically accountable for the realisation of benefits. In major projects this is not always practical so accountability may be devolved to the Programme Director

Services

Services are intangible products such as the intellectual expertise provided by architects, IT specialists, engineers etc.

Services is also the collective noun for the equipment that provides heat, light, power, water and drainage to a building.

Specification

The technical detail of what is required and the standard to which it is to be provided.

It is a description of requirements and standards to which the goods, works or services should conform. Also known as a statement of needs, a statement of requirement, an operation requirement or a brief. Its purpose is to present prospective suppliers with a clear, accurate and full description of the organisation’s needs, to enable them to propose a solution to meet them.

Standing Orders

The Local Authority’s rules and procedures that govern its activities, including procurement of goods, works and services.

Standard terms & conditions

Documents published by specialist organisations intended to provide a consistent basis upon which the client and contractor (or consultant) can form a contract.

Standstill

A period following the decision to award a contract to a tenderer during which any bidder may challenge the process resulting in a stay of award.

Submission

An alternative name for the tender submitted by bidders.

Supplier

Any individual or company providing goods, services or works to a client.

T

Tender

The term used to describe the procurement process of advertising, requesting and awarding a contract.

Tenderer

A individual or company which submits a tender in a public procurement procedure (see also Economic Operator)

Threshold

A monetary point equal to or above a set financial threshold at which certain procedures and rules must be followed. In Scotland thresholds are set by reference to the Procurement Reform (Scotland) Act 2014 and the Publics Contract (Scotland) Regulations 2015.

V

Value for money

The prime objective of Scottish Government procurement policy, defined as the optimum combination of quality and price to meet the client’s business requirements.

W

Weighting

The means by which criteria are objectively ranked and scored according to that rank.

Whole life cost

The systematic consideration of all relevant costs and revenues associated with the cost of an asset, including the design, construction, management, maintenance and decommissioning.

Works

The outcome of building or civil engineering works taken as a whole which is sufficient in itself to fulfil an economic or technical function. In other words this is the construction of a built asset such as a road, an office block or school. Those that have a value exceeding the current threshold defined by the WTO GPA rules are subject to specific tendering requirements. Standing Orders may have different values covering works, services or supplies.