On a traditional single-stage tender, contractors price a complete design and the lowest compliant price usually wins. That works well when the design is complete and the risks are known. When they are not, a two-stage approach under a pre-construction services agreement often produces a more reliable price and a better building.

Stage one: pre-construction

  • The contractor is appointed under a PCSA, with a fee for the pre-construction services.
  • Preliminaries, overheads and profit are tendered competitively and fixed.
  • The contractor works with the design team on buildability, sequencing, temporary works, surveys and long-lead items.
  • A cost plan is developed openly and checked against the budget at agreed milestones.

Stage two: agreeing the contract sum

  • Work packages are tendered to specialist subcontractors on an open-book basis, usually with at least three quotes each.
  • The client's cost consultant reviews the returns, and the contract sum is agreed.
  • The building contract, often JCT Design and Build or Intermediate, is then entered into.

Advantages and risks

The advantages are an earlier start, better information about cost and risk, and a contractor who understands the design before building it. The main risk is weaker price competition in stage two, which is why open-book pricing and a clear right for the client to walk away are important. Our PCSA sets out the services, fee, deliverables and the client's right not to proceed.