Public Procurement – Procuring for the future

Presentation 13th March 2018

Páirc Uí Chaoimh, Cork

Procurement Risk

Ollie Moroney (BAM)

Overall Irish Construction Output

Average construction output norm

Unsustainable

development

Banking & Financial

CrisisRecovery

at 2016 equivalent prices

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

2013 2014 2015 2016

BAM: Civil Engineering and Building % Split

Civil Engineering General Building

Procurement &

Delivery Methods Traditional Contracting

General Contracting

Alliance Contracting

Early Contractor

Involvement (ECI)

Design Assist

Design & Build

Design, Build, Finance,

Maintain & Operate

eTenders. National eProcurement portal.

Public Tenders

• Prior Indicative Notice (PIN)/ Contract Notices,

Procedures

• Open,

• Restricted,

• Others including Competitive Dialogue & Competitive Negotiated Procedure

Risk Profiling of Tenders

Tender categorisation is used to assess the complexity and risk exposure of a

tender in an objective and standardised manner. Criteria considered in the

assessment are;

• Order value,

• Contract (scope and type),

• Location,

• Complexity,

• Technology (incl. ground conditions),

• Previous relationships & experience

• Other project risks.

Scoring is undertaken Very low, Low, Medium, High, Very high.

Different weighting factors are used for each criterion in the scoring model.

Scoring obtained in the assessment is used to classify the Risk Category of the

tender.

Risk Register

• Safety,

• Funding,

• Location,

• Contractual,

• Financial,

• Technology,

• Project Team,

• Partners,

• Design,

• Other.

Peer review undertaken as required.

Tap into experience of others whom have carried out similar works within the

organisation.

Identify Risks and mitigation measures. Quantify risks again after mitigation.

Risk quantification prior to mitigation measure

5 5 10 15 20 25

Likelihood of

Occurence 4 4 8 12 16 20

3 3 6 9 12 15

2 2 4 6 8 10

1 1 2 3 4 5

1 2 3 4 5

Impact

on Cost

Types of Contract

• PW-CF1. Public Works Contract for Building Works Designed by

the Employer. €5M +

• PW-CF3. Public Works Contract for Civil Engineering Works

Designed by the Employer. €5M +

• PW-CF5. Public Works Contract for Minor Building or Civil

Engineering Works Designed by the Employer. €0.5M to €5.0M.

• NEC3 Options A, B & C.

• FIDIC.

• ICE.

• IEI 3rd,

• PPP Forms of Contract.

• Bespoke Contracts.

Clients are tending, more often than not, to heavily amend standard

contracts in order to transfer risk and liability onto Contractors.

Buyer and Supplier Risks

Literature review of risk allocation with fixed price & cost based contracts

Types of Contract

Fixed price

Fixed price with price increase

Fixed price with remeasurement

Fixed price with incentives

Cost plus incentive fee

Cost Sharing

Time and materials

Cost plus fixed fee

Buyer

Risk

Supplier

Risk

High

LowHigh

Low

• Move away from public works contracts in Ireland because of the risk allocation

associated with the new forms of contract.

• New forms of contract for public works in Ireland have proven adversarial rather than

partnering in nature.

• Some Clients are moving away from Public Work Contracts & Bespoke Contracts to

Contracts with Collaboration and Partnership.

• Cost certainty required by Clients (buyers), but this places high risk with Contractors

(suppliers). Contractors operate off low margins.

• Clients are looking for Value for Money.

Summary

Thank you for your attention

Ollie Moroney Senior Estimator (BAM)

Always looking to network with like

mind individuals

Ollie Moroney

Senior Estimator (BAM)

www.linkedin.com/in/ollie-moroney-

3a96a622