Know Your Contract

Precontract Review

Client

The client we represented is a sub-contractor who was invited to tender for a large groundworks package for a retail development by a tier 1 main contractor.

Sector

Building and Infrastructure

Contract Value

The value of this sub-contract was €2,769,769

Challenge

Before this tender, our client

Mostly carried out works on a day rate basis.
Mostly carried out works on projects of a lower value and size.
They had never tendered for a tier 1 main contract or as a main contractor before now.

Our client wanted to move away from day rate tendering and tender for work on a contract basis for tier 1 main contractors or as a main contractor to increase turnover and profit margin. However, they were reluctant to make this progression as they were not familiar or comfortable with the tender documents issued by tier 1 contractors, which mostly contained specifications, drawings, conditions of contract, and bills of quantities.

Our client needed a better understanding of these documents on matters such as

the scope of work being tendered for, i.e., was it fixed price tender or re-measurable?
the risks they were being asked to include in their tender, i.e., what happened if the bill of quantities descriptions and quantities were incorrect?
how were the contract documents to be interpreted if they were inconsistent with each other?
a better understanding of the conditions of contract.

Solution

To make the progression to tier 1 and main contract tendering, our client engaged our services to support them with this tender. This support included:

Determining what scope of work our clients tender was to include for, i.e., was it based on drawings and specification or bills of quantities.
Determining if our client is responsible for errors and omissions in the bills of quantities and what these errors and omissions are.
Outline to our client what risks were allocated to them and which risks belonged to the Employer, i.e., would our client be compensated for changed ground conditions or unforeseen services etc.
Outline what inconsistencies existed between tender documents, i.e., the drawings, the specification and the bills of quantities, and determine if these inconsistencies gave our client a competitive advantage or not.
Explaining how the conditions of contract operated.

Result

With our support, our client understood what they were being asked to tender for and the risks they were asked to include. Even though they were not successful on this occasion, they would have proceeded knowing all the facts had they been awarded this tender.

Our client has since made the progression to tier 1 and some main contract works where their turnover has increased by 42% over 12 months, and their profit margin has increased by 8%. Knowing all the facts at tender stage has greatly benefited our client and helped them progress to tier 1 and main contracting.

Precontract Review