How do you engage a contractor early? A deeper dive into early contractor engagement

In our first article, we focused on the concept of early engagement, its challenges and how it can benefit clients, consultants and project teams. Today we’re discussing how you actually go about engaging contractors at an early stage.

Soft market testing

This first suggestion is soft market testing.

Soft market testing or early market engagement is the process of engaging with potential contractors prior to going out to tender. This allows contractors to advise on the specification and prepares them for upcoming opportunities.

Once soft market testing has been completed, clients will have a better understanding of what is possible within their budget and timescales, as well as other considerations they may need to account for. You will also be able to establish contractor interest and capacity to tender for the scheme.

The key concepts of soft market testing are:

• Engage the market months before procurement;
• Seek advice on procurement methods and market risk factors;
• Contractors to provide a brief document outlining requirements;
• Ensure pipeline visibility as a client – this enables the contractor the allocate preconstruction resource to a tender and share the opportunity with the supply chain who also need to programme capacity;
• Engage contractors in advance, not the day before the tender goes out.

Choosing the procurement route

Following soft market testing, consideration of the procurement routes is key, as different routes have different risks associated with them for the contractor than others, which will come down to the type of scheme being procured.

That’s why it is important to engage with the market prior to tender to assess if they are able to – or willing to – tender a project on a specific procurement route or if they have alternative suggestions. Most contractors will have the same perspective on procurement routes so without consulting them, you may find a lack of response or willingness to bid once the tender is launched.

Two-stage over single stage

While there is absolutely a market for single stage projects, in our experience two-stage tendering promotes early contractor engagement and is extremely beneficial to the project, allowing buildability issues to be brought to the forefront much earlier on in the process. Our approach centres around collaboration with our clients and wider supply chain partners, creating an environment which best suits the two-stage method. This is particularly the case for logistically challenging or complex refurbishment projects and those with more complicated programmes and high value.

During a two-stage tender process:

• Contractors provide overheads, preliminary costs, and profit rates;
• Contractors submit a qualitative response;
• The client selects a contractor to move forward to the second stage.

The benefits of a two-stage approach include:

• Early engagement increases collaboration across the project team;
• Proactive engagement of our supply chain, providing specialist input and advice upon design development and cost;
• Internal risk management provisions used to identify and quantify risk to ensure it is mitigated or completely removed at the earliest stage;
• Complete transparency in access to trade package quotes to avoid delay within the delivery process.

At Speller Metcalfe, we do tender a lot of single stage project too – it just depends on the details of the project itself.

Quality information

Another consideration for the client is the quality of information being provided at tender stage. Unsurprisingly, poor quality information (which sadly is a regular occurrence), makes accurately pricing a project particularly difficult. For example, a single stage D&B scheme, where the contractor shoulders the majority of the risk, often comes to us with little to no survey information. With the tight turnaround time required at tender stage, it’s imperative we know what’s in the ground for example, otherwise there could be a huge amount of risk when it comes to the project going to site.  This will not give best value to clients if the surveys haven’t been provided at tender stage, contractors will have to price unknown risk into their tender figure to cover potential risks when it could potentially not be required.

It’s also time consuming for the contractor, supply chain and client where excessive tender questions become the norm due to poor information, leading to a complex tender comparison and inevitably an extension of time is required to dutifully fulfil the needs of the tender.

A simple rule? Always allow sufficient time in your pre-construction programme to produce considered, comprehensive documents.

A summary

Overall, implementing early contractor engagement involves foresight of the client to get contractors or suppliers involved in the scheme at the same time as other consultants (architects and project quantity surveyors as examples). It’s a beneficial process for everyone involved and can ensure that schemes come to fruition in line with the client’s needs.

Our very own Jessica Munn delivered a presentation on the benefits of early contractor engagement at our Bristol Bill Munn Knowledge Series back in November. If you would like to view the presentation or indeed have a more in depth discussion about how this can positively impact your scheme and your bottom line, drop her a message or email Jess.munn@spellermetcalfe.com.