Interserve Ltd. (‘Contractor’) are 41 weeks in on a school extension (‘The Project’), which is to be handed over at the end of week 60. The project is on an existing occupied secondary school site for Merthyr Council (‘Client’) in Wales. The procurement approach is a novated Design & Build (D&B), as Capita the design team partner (‘DTP’) were the client’s representative, who conducted the feasibility studies/site tests, as well as school design up to RIBA stage C along with conducting the tenders. It was decided to involve the successful contractor from RIBA stage D onwards in order to develop the sketch plans into detailed design and cost proposals. This would allow the contractor to bring direct market knowledge along with buildability advice to the table
The contractor was awarded the project after a two-stage tender process, with the 1st stage based on outline specification and preliminary cost plan details for pre-construction, mobilisation, components, direct and sub-contract fees along with a quality element. The 2nd stage was solely with the contractor to achieve a high degree of cost certainty through market testing of the works packages to provide a lump sum figure, which was to be incorporated into an NEC 2005 Option A Contract with Activity Schedule. During the second stage full design details were developed, from which the contractor prepared bills of quantities and subsequently various priced sub-contractor packages. This was then submitted to the client along with various cost savings to provide a market tested package totalling 200k against the budgeted target cost of 4m.
The contractor is capable of ‘Pure’ D;B but as the client has already engaged with their own DTP, the initial configuration was more representative to ‘Fragmented’ D;B, as the contractor was not at that point certain who will become the supply chain. The diagrams below illustrate the relationships pre ; post RIBA stage D: 2. The Appointment The contractor is appointed on an OJEU procured government framework, which allows any public body to call-off from the framework without repeating the lengthy process involved, this process also ensures the public client maintains compliancy with The Public Contracts Regulations 2006.
For appointment to the framework the contractor went through a 2 stage process including a pre-qualification stage and a tender stage. 40 other contractors were involved in the 2nd stage of which a maximum of 9 (3 per region of mainland UK) could be appointed. The evaluation areas included: 1. Design capability (inc. any consultants offered) ; sector experience 2. Demonstration of sector experience with references and case studies 3. Project partnering, supply chain management, continuous improvement, achievements, value engineering, change management, capability, development process and local training/employment 4. Efficiency and reliability 5. Sustainability credentials 6. Price, agreed maximum percentages on for fees and OHP, based on project types and values To satisfy the above and become successful, various departments within the contractor’s organisation had a role to play.
Marketing The contractors firm firstly would have a corporate strategy identifying the market segments from which they will aim to operate effectively. From this the business strategy will dictate the contractor’s stance/priority when bidding for work within the market segment. For success the contractor’s mission statement would have to reflect relativity to the sector they operate in, so the philosophy and attitudes of the contractor should closely resemble what a client will potentially be looking for.
Estimating This department had to ensure that they price appropriately, in line with the business strategy and mission statement. Firstly to ensure that they remain competitive to get onto the framework in the first place, but secondly that they have the capability to service the framework for the four year duration in line with their mission statment. Management (Department Heads & Directors) Once the first phase was successfully passed all that remained was interviews and workshops with the contractor’s heads. This was in order to ascertain their understanding of the sector and opportunity in front of them and commitment for servicing the public sector. This stage is mainly for stimulating a positive start to the potential four year relationship but anything that is unseemly could be further investigated.
3. The Project Approach Once appointed onto the framework the contractor then commenced delivery of actual projects, which clients called-off under the framework. Identification of projects can be sourced via two methods: 1. Direct from public clients calling-off from the framework 2. Direct from the contractors pre-existing public client portfolio (as this project was sourced) Either way, the contractor needed to effectively manage the enquiry from conception to completion. The process and business units contributing to this post framework appointment stage include:a. Business Development (BD) b. Bidding (mini-tendering to ascertain bespoke rates) c. Project implementation ; delivery
One point to note is that the marketing department is involved in every stage listed above, be it laying down the guidelines for initial publicity in line with business strategy, providing supporting material during the bidding phase, promoting success on award/delivery and post completion of contract. This also includes marketing review, for case studies, intelligence, strategy changes, what’s working well, what’s not and why etc.
Business Development Once appointed onto the framework the BD team actively promote the framework in line with their marketing objectives to potential clients. This also assists with relationship building, in order to increase chances of success when mini-tendering for works under the framework (as the public client does not have to chose the lowest tender). As the framework is open to any public body the contractor can also promote it to their existing clients, where they have built up good rapport, who in turn also spreads the word of the benefits to other public bodies during conferences etc.
This relationship building has been recognised as a necessity by many contractors and thus most capable firms have BD units to maintain this aspect of the business. As Preece et al. (1996) stated that ‘word of mouth’ recommendations are as effective as any other type of marketing promotion. This point is imperative in such a short lived industry with numerous entrants and leavers and hence client confidence is swayed by market gossip…image/reputation is key! On this occasion the BD team indentified the opportunity and engaged with the client, resulting in a commitment to use the framework. Prior to this the client was already engaged with the DTP and was in the process to procure traditionally, but time was a critical factor and this partly influenced the client to use the framework.