Construction practice guide: Preparing project management services tender documents

Updated: 1 Jul 2008
How to use the project management services standard form to prepare the tender document for construction projects.


Use the project management services standard form to prepare the tender document. Seek advice from the NSW Procurement Service Centre if in any doubt.

This guide provides instructions on each of the sections in the standard form.

Adherence to the form will assist in preventing problems such as inadvertently establishing circumstances whereby a project manager can be considered an agency employee.

Preface

The preface is optional but an opportunity to set the scene with a summary of the project and services required of the project manager.

This template also includes a cover sheet and a master table of contents.

Conditions of tendering

Conditions of tendering set out the obligations tenderers must meet. Complete the standard set of conditions of tendering, following prompts given by guide notes. Add any special conditions.

Consult with stakeholders as required. Identify any special needs for the tender process and incorporate them in the conditions of tendering. Give attention to the following:

Submission of tenders

Tenders must be submitted by etendering, in a tender box, or to an approved secure facsimile number.

Alternative tenders

Alternative tenders are not normally required.

Where alternative tenders will be considered, determine how an alternative tender will be evaluated against other tenders so that each is treated fairly and consistently.

An alternative tender may offer different commercial conditions, qualifications of any kind, or departures from the service requirements but must describe and price each alternative on a separate tender schedule.

Evaluation criteria

Criteria used to evaluate tenders (but not their relative weightings, nor details of how they are assessed) must be listed.

Information needed for tender assessment must be identified and reflected in content of the tender schedules.

Tender schedules

Tender schedules seek specific information from tenderers for the evaluation of tenders.

Identify which tender schedules are needed to allow tenderers to describe their offers in terms of the evaluation criteria. Delete any which are not needed and create additional schedules if needed to cover the evaluation criteria.

Prepare the schedules using the guide notes and as best fits the needs. It assists both tenderers and tender evaluation if the schedules identify all information required for each tender assessment criterion.

Schedule of prices

The default fee option in the standard form document is a lump sum. This is supported by the schedule of prices which assists tenderers to assess and estimate the cost of the services.

While the schedule of prices does not form part of the agreement, it does set out the expectations so there should be no surprises for the project manager and no cause for claim for extra payment. It is also intended to assist the parties to the agreement in evaluating payments due.

The schedule of prices included in the standard form may cover more than is expected for the project management engagement and it may omit necessary items. It must be reviewed and revised to include everything required in the services.

Outline services delivery plan

This section requires the tenderer to provide broad details of how the tenderer intends to perform the services to meet the requirements of the agreement.

It must demonstrate the tenderer’s work methodology and understanding of the requirements. Information provided will assist assessment of the non-price criteria.

Consider the amount and the type of information to be sought. The scope and depth of information in this section must be less than in the services delivery plan (required as part of the services).

Consider the relevance of information requested. Will it assist in evaluating the tender?

Conditions of agreement

The conditions of agreement are the contractual conditions for the engagement.

Use the wording exactly as given in the standard form without change. Exercise options if required by guide notes.

Where additional agreement conditions may be required, seek advice.

Agreement information

The agreement information contains details that tailor the conditions of agreement to the particular engagement.

Complete the agreement information in accordance with the guide notes. Note the below items.

Item 5. Time to complete the contracts

Make every endeavour to set a realistic time bearing in mind the impact of a short completion time on the quality and cost of the project outcomes, as well as the impact of a long completion time on the overall project program. See also Item 18. Expiry date.

Item 10. Reimbursable expenses

Reimbursable expenses are part of the project manager’s remuneration.

Identify what project-related actual costs the principal will pay for and which therefore do not need to be allowed for in the fee. These are usually mandatory costs beyond the project manager’s control, so there is little point including them in the competitive basis for the fee.

Item 12. Payment timetable

The given times satisfy requirements of the Building and Construction Industry Security of Payment Act 1999.

Item 14. Professional indemnity insurance

Professional indemnity insurance covers the risk of the project manager’s liability for injury, death and loss or damage caused by errors or defects as a result of the project manager’s negligence in the performance of the services.

The conditions of agreement require that the project manager carry professional indemnity insurance. It can be expected that a project manager prequalified under the Consultants in Construction Scheme would carry ongoing professional indemnity insurance.

Nominate an amount of professional indemnity insurance no less than 20% of the total construction project cost estimate, and between a minimum of $250,000 and a maximum of $5 million.

Item 18. Expiry date

Each contract to be managed by the project manager will have a completion time. For example, GC21 construction contracts have a date for completion and consultant agreements have time to complete the services.

However, the project manager standard form does not have a date for completion or a time to complete the services. The project manager is expected to continue to manage the contracts even if they run overtime.

The expiry date in the agreement must be a date well after the anticipated date of completion of the last contract. See Item 5. Time to complete the contracts.

Seek advice from the NSW Procurement Service Centre if another expiry date is contemplated.

The project manager cannot terminate the agreement earlier than the expiry date. Only the principal has that right. If there were no expiry date, the project manager would be able to terminate at any time.

The time to complete the project is a critical element of project management performance reporting. While there are no contractual penalties in a project director or project management agreement for failure to have the project completed on time, poor performance will influence future engagement opportunities.

Item 19. Project budget

This should be as shown in the project description.

Project description

The project description section gives background about the project. It does not describe services the project manager is required to deliver. It describes how works and services to be undertaken by everyone involved with the project interrelate.

The project description will:

  • identify the project management services required
  • identify the type, timing, and technical expertise required
  • give facts about the project, and how works, services or other activities relate
  • provide a statement on what is to be achieved and how it is to be achieved
  • set out objectives in terms of time, cost, quality, function and scope
  • describe the functional and operational requirements for the project, giving statements of end-user requirements
  • will take into account the nature and phases of the project
  • will show the proposed organisation structure
  • will set the framework for the legal relationships between the client agency’s principal, and the works and services providers.

Sample project description

Click below to view a sample project description:

The Principal does not warrant the accuracy of any content in this Project Description or that it is exhaustive.

The Principal relies on each party to a contract with the Principal to have satisfied itself at the time of entering into the contract as to the requirements for satisfactory completion.

The Trust

The Ettamalong Sport Centre Trust (the Trust) is responsible for the development and operation of the Ettamalong Stadium (the “Stadium”). The Trust owns the Stadium.

Scope

The Project is to add a new grandstand and other facilities (“New Grandstand”) to the Stadium. The New Grandstand will be a key addition, upgrading about 12,500 seats, and be fully integrated into the existing systems and facilities at the Stadium.

Works for the New Grandstand will include:

  • relocating existing corporate boxes from the eastern side to the northern and southern ends of the Stadium,
  • relocation of lighting towers to allow continuing use of the Stadium, relocation of the electronic scoreboard to the northern end of the Stadium, and
  • removing existing timber seating from the concrete plats at the northern and southern ends and installing seats.

The New Grandstand must provide value for money on a whole-of-life cost basis, and meet the long-term operational needs, with the ability to be safely constructed, operated, maintained and upgraded.

The design life for permanent structures will generally be 100 years. Some operating systems and parts will have shorter service lives, subject to the outcomes of whole-of-life value management analysis.

A  concept design outline for the New Grandstand has been developed and is included in 'Drawings and documents'. The concept design outline describes a preferred layout and alignment for the New Grandstand, with preliminary cost estimates.

The site

The New Grandstand will be on the eastern side of the stadium. The Site will include some areas on the northern and southern ends of the Stadium needed for the relocation of corporate boxes.  The location and layout of the Site are indicated in 'Drawings and Documents'.

The Project Manager will coordinate the Project with continuing use of the Stadium for sporting and other activities.

Objectives

The principal purpose of the New Grandstand is to address the future needs of the Stadium by improving the spectator amenity for viewing Stadium events and activities. Other purposes and objectives include:

  • providing safe facilities that assist in improving integration between elements of the Stadium
  • ensuring safety for workers and the community during construction, operation and maintenance of the Stadium
  • minimising impacts on the existing Stadium and associated disruption to customers and the community during construction of the Stadium
  • providing quality assets with the Stadium that achieve the capacity, safety, reliability and accessibility performance requirements in a cost-effective manner
  • avoiding adverse environmental impacts through appropriate design and construction management and the use of appropriate technologies
  • managing risks and work using management plans, and
  • completing construction for operation of the New Grandstand by mid 2004.

The Trust requires the development to allow the maximum Stadium use and crowd capacity during the 2003/2004 Ettamalong United soccer season and the Ettamalong Daze rugby league season.

Project structure

The Trust and hence the Principal for the Contracts will be represented by the Principal’s delegate. The Principal’s delegate will be the formal link for the involvement of, and communication with the Trust, Service Providers, New Grandstand users and related stakeholder representatives.

A Project Manager will be appointed to carry out all the services and work required for the management of the Contracts, and related Service Providers (including Consultants), and the carrying out of the services and works through the Contracts.

The Project Manager will manage the processes required for the Principal to respond to the design under the Agreement.

The Stadium management personnel and users will also be involved with the Principal’s responses, including assist in reviewing and assessing the compliance of the Consultant’s design work with the Agreement.

The Project Manager will assist with liaison in the New Grandstand design with these stakeholders.

A Quantity Surveyor will advise the Principal.

The relationships between the key stakeholders in the Project, including those involved in ensuring compliance with requirements, are shown diagrammatically in the Attachment: Project Relationships.

Project budget

The  Project  Budget is the amount given in Item19 of the Agreement Information. The budget for the New Grandstand is $17 million (excluding GST).

Project program

The expected timing for the New Grandstand delivery is as follows.

  • Invitation to submit consultant tenders: 2 April 2003
  • Closing date for consultant tenders: 29 April 2003
  • Appointment of Consultant: 5 May 2003
  • DD&C Contract request for tender: mid June 2003
  • Development Application to Ettamalong City Council: 19 June 2003
  • Completion of design/documentation sufficient to let: 1 August 2003

The services

Service identification

The services describes what the project manager is required to provide in terms of services and deliverables. You should cover:

  • the phases of the project that the project manager is to manage
  • general and specific management services
  • the payment regime for service providers
  • documentation that is to be delivered
  • client reviews that will be required.

The project management services will include selection and management of the service providers. These are likely to include consultants for planning assistance or asset design, and contractors for construction.

Preparing the services

Be sure the service requirements are described sufficiently and that deliverables are itemised. The project manager cannot be asked for unspecified services under a lump sum fee.

The standard form provides a comprehensive list of possible services and deliverables. Review for applicability, then amend, add and delete as required to create a statement of expectations for the project manager. Follow the guide notes.

Use the imperative when making a change or specifying services, that is 'The project manager must'. To avoid ambiguity, use initialised terms where defined, for example 'Contract'. Include services only, not conditions of contract or information about the project.

Check that what is required in the services is covered in the schedule of prices to assist in making payments and to avoid cause for dispute.

Appendices

Prepare tender document appendices as required. Appendices can simplify tender documentation by separating specialist matters.

The typical appendix supplied in the standard form is Documents for the services.

Delegation of authority

Identify the delegations of authority required for the project manager to manage the expected contracts based on the appropriate standard forms, for example GC21. Prepare and list them at the Documents for the services appendix.

Ensure that delegations to the project manager (as agent) are appropriate for those standard forms. Any of the following may be required as the basis:

  • GC21 contracts
  • Minor Works contracts
  • Mini Minor Works contracts
  • Consultant agreements.

Review and revise as required, the relevant schedules of contractual authorities.

If intending change, be aware that a proposed delegation of the principal’s authority may be restricted by the Public Finance and Audit Act 1983. For example, a project manager from the private sector cannot pay service providers on behalf of the principal.

If the agency has engaged NSW Public Works as project manager, any of the agency’s powers can be delegated.

Approval

Obtain concurrence to the tender document from relevant stakeholders. Check that issues raised are resolved or accounted for and necessary action has been taken.

Obtain approval from the responsible manager.

Related resources

Find more resources on the construction category page.