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.