subcontract and supply enquiries in the tender process of contractors

Subcontract and supply enquiries in the tender process of contractors

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Construction Management and Economics ( December 2009) 27 , 1219–1230 Construction Management and Economics ISSN 0144-6193 print/ISSN 1466-433X online © 2009 Taylor & Francis DOI: 10.1080/01446190903394533 Subcontract and supply enquiries in the tender process of contractors SAMUEL LARYEA * School of Construction Management and Engineering, University of Reading, PO Box 219, Reading RG6 6AW, UK Taylor and Francis Received 25 March 2009; accepted 6 October 2009 10.1080/014 6190903 9453 In the tender process, contractors often rely on subcontract and supply enquiries to calculate their bid prices. However, this integral part of the bidding process is not empirically articulated in the literature. Over 30 published materials on the tendering process of contractors that talk about enquiries were reviewed and found to be based mainly on experiential knowledge rather than systematic evidence. The empirical research here helps to describe the process of enquiries precisely, improve it in practice, and have some basis to support it in theory. Using a live participant observation case study approach, the whole tender process was shadowed in the offices of two of the top 20 UK civil engineering construction firms. This helped to investigate 15 research questions on how contractors enquire and obtain prices from subcontractors and suppliers. Forty-three subcontract enquiries and 18 supply enquiries were made across two different projects with average value of £7m. An average of 15 subcontract packages and seven supply packages was involved. Thus, two or three subcontractors or suppliers were invited to bid in each package. All enquiries were formulated by the estimator, with occasional involvement of three other personnel. Most subcontract prices were received in an average of 14 working days; and supply prices took five days. The findings show 10 main activities involved in processing enquiries and their durations, as well as wasteful practices associated with enquiries. Contractors should limit their enquiry invitations to a maximum of three per package, and optimize the waiting time for quotations in order to improve cost efficiency. Keywords: Case study, enquiries, subcontractors, suppliers, UK. Introduction In the tender preparation process, construction contractors often engage with suppliers and subcon- tractors (S&S) to obtain prices relating to materials and subcontract packages in order to calculate the bidding price for a project (see an experiential-based textbook by Smith (1986, pp. 38–44); and a textbook by McCaf- fer and Baldwin (1991, pp. 17–26)). The document sent out to request prices from S&S is commonly referred to as an ‘enquiry’ (CIOB, 1996). There is ample guidance in the Code of Estimating Practice published by the Chartered Institute of Building (CIOB) in 1996 (pp. 48–68) on how contractors should normally deal with enquiries. Several published materials on estimating and tendering in construction also talk about enquiries (see Appendix 1). Hence, it would appear on the face of it that the subject is wellil- luminated in theory and practice. However, this notion is not correct.
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This note was uploaded on 05/06/2011 for the course BANKING 254 taught by Professor Kumar during the Spring '11 term at Birla Institute of Technology & Science, Pilani - Hyderabad.

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Subcontract and supply enquiries in the tender process of contractors

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