Large complex projects are often associated with complex project schedules and deliverables, and typically last longer time duration, while consuming large sums of money. Projects involving public projects are particularly challenging because of the need to marry the requirements for the project and public concerns in including regulations and rules (Eriksson, 2017). As such, the management of such projects must be done creatively and innovatively, starting from the tendering stage. The Australian authorities have published the AS 4120-1994, a standards guideline for ethics and methods for how to effectively manage tendering and contract management for large projects (Tasmanian Government, 2017). This paper describes a large complex project involving the construction of a solar-thermal power plant in Victoria, Australia. This paper discusses various aspects of the AS 4120-1994 in the context of the project tendering process, contract management, quality management, safety, and dispute resolution, as well as the procedure for inviting the tenderers, tender evaluation, and award of tender after a through tender negotiation. Ethics has become an increasingly important aspect in contract and tender negotiations; hence these must be incorporated from the early stages to ensure project success (Uher & Davenport, 2009)
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1. The AS 4120-1994 The AS 4120-1994 main standard to manage tendering for large projects that include the utilization of public assets, put forth by the Standards Australia Committee on Construction Industry Practice; this standard supersedes the AS 4120 (Int) 1993, tendering Code. The AS 4120-1994 sets out and characterizes the commitments and morals of the bidders and Principal in the process of tendering for construction work. The AS 4120-1994 applies to the code for choosing contractors and sub-contractors. The Standard vouches for empowering elevated amounts of moral benchmarks in tendering in the construction business with the conviction that higher profitability, negligence and malpractices, better working conditions, and superb construction work will be accomplished as a result. |
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1.1 Definitions Civil construction sector- Industry sector involved in preparatory works at sites such as demolition, earthmoving, and excavation for sewerage, water recirculation, drainage, major and minor roads, dams, and general infrastructure as well as quarrying and related work Principal- An initiator or project owner that invites interested parties and receives proposals or tenders from them Consultant- A person providing specialist professional services and/or advice. Contractor- An entity that provides construction and building works as well as services, and includes suppliers and subcontractors Industry- Is the Civil Construction Sector/ Industry Intellectual property- Any registered design, patent, trademark, copyright or name that includes list of suppliers, trade secrets, manufacturing methods and customers. Superintendent- Superintendent is a person appointed to oversee a project under the General Contract Conditions Tender- Refers to an offer made in writing that includes price/ cost, as a response to invitations to supply goods, perform works, or associated services Tenderer-Any party that submits a tender, and includes contractors, suppliers , and subcontractors |
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1.2 Statements of Ethics The contractor/ winning tenderer will agree to perform the construction project with integrity, fairness, impartiality and efficiency, and will also expect parties they work or collaborate with to live up to the same principles. The facts given by the tenderers need to be correct and based on confidence and trust, with a focus on offering best value for the Principal, including during the process of tendering. The relevant environmental practice standards as well as the safety standards prescribed by the OHS must be upheld by all the parties, and accountable industrial relations has to be practiced and encouraged at all times. This tender guideline is directed by the ethical ideologies of reliability, fairness, integrity, fair reward, objectivity, accountability and service, as defined in the AS 4120-1994 |
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1.3 Tendering procedures |
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1.3.1 Obligations of Principal The principal must guarantee that the tendering process meets stipulated ethical standards and that the specified requirements and conditions for the contract are what is essentially needed for the profit of the Principal as stipulated in the AS 4120-1994 |
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1.3.1.1 Definition of the Project This tender specification document is for a project involving the construction of a solar thermal power plant in Victoria in Australia; the region has sufficient sunlight |
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1.3.1.2 Tender documents The tender forms will be obtainable from the offices of the Principal and can also be obtained by downloading them from the online portal of the Principal. Those participating in the tender must duly fill the tender document , in acquiescence to the law, and satisfying all requests, including the requirements set by the AS 4120-1994 for tendering for construction projects |
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1.3.1.3 Selecting tenders All the parties that qualify by adequately meeting all the requirements for the tender as set in the tender requirement documents based upon legal compliance, experience, technical capacity and having the financial wherewithal to perform the tender will be eligible to take part in this tender |
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1.3.1.4 Call for tenders This request to tender is in the form of an open tender publicized in various mass media, including newspapers and television, and on the Principal’s website so that those interested can apply. The tender is complemented by a pre-qualification document for tenderers which must be filled by all bidders |
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1.3.1.5 Method of Tendering The favored tendering process is that of an open tender which best suits public tenders. It provides all qualified tenderers an opportunity to tender and satisfies the AS 4120-1994 requirements as well as prevailing public procurement regulations. |
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1.3.1.6 Tender inquiries All queries concerning this tender will be directed to the Principal for any explanations; with inquirers stipulating which part they would like a response. Before submitting the tender, all the tenderers will be allowed to ask for any explanation before they submit the tender document. |
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1.3.1.7 Amendments to the tender documents The Principal has the rights to make any alterations to the tender documents as long as the existing tender rules are adhered to, at any time; all tenderers have a commitment to submit their proposals, accompanied with any of the amendments if any amendments were made. In the event tenderers have already submitted their proposals and an alteration / amendment is made, the Principal will communicate these duly to all the shortlisted tenderers. All adjustments will also be appropriately communicated to all tenderers |
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1.3.1.8 Receipt of the tenders The correctly filled tender forms will be received at the Principal’s not later than the specified tender closing date and time. All submissions for tenders must be done in electronic form and marked clearly with the project tender number as well as the tenderer details, together with any alterations made |
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1.3.1.10 Tender Evaluation After submission, all tenders will be evaluated based on the set standards and scores awarded by the tender reviewing committee. The tenderer with the highest score will be awarded the contract and be appropriately informed in writing. All tenderers that did not qualify will also be duly informed of the decision reached. The tenderers are to be assessed based on these principles;
The appraisal will both be qualitative and quantitative |
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1.3.1.11 Negotiation and selection The eligible tenderers will be requested to attend a meeting through which more deliberations and discussions will be done. The negotiation stage will guarantee that all matters are smooth out, comprising methods for financing and payments, with the eligible tenderer requested to raise any questions. Upon settlement, an official offer will be made, along with a binding contract signed to set the project rolling |
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1.3.2 Obligations of Tenderers |
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1.3.2.1 Genuine belief As stipulated by the AS 4120-1994 standard, all tenderers are obliged to submit tender forms only if they believe genuinely that they have the competence, capacity, and means to embark on the contract. The Principal might need the tenderers prove whether they have contracted agreements with the other tenderers |
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1.3.2.2 Documents Return All the tender forms must be provided in electronic form |
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1.3.2.3 Tender Documents Evaluation The tender forms will be appraised based on quality and in fulfillment of the detailed tender requirements, based upon how sound the tenderer has fulfilled the requirements. All the tender forms that miss the mark in fulfilling any of the stated requirements will be vetoed. Only persons with the required abilities and credentials will be permitted to appraise the tenders. All tenders offering extra innovations will be given due consideration, but only if satisfying the wider project requirements. The appraisal will tail a seven step procedure that comprises;
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1.3.2.4 Formulation of tender and estimates |
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1.3.2.4.1 Project human resources The tenderer must demonstrate how they will obtain and preserve skills and knowledge, and their information administration as well as the appropriateness of their human resources to the project requirements. The efforts supervision must fulfill the Principal ‘s requirements |
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1.3.2.4.2 Project plant The tenderer has the obligation develop a appropriate project plant at a site within Victoria at a place that can capture maximum solar energy and does not harmfully disturb present social, environmental systems, and the economic. The tenderer must procure other essential resources to drive the plant and also acquire other required materials for , storage, logistics and operation, including circulating water that has to be discharged safely |
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1.3.2.4.3 Project materials The materials required for the project are defined as per the table below; Description Weight circulating water structure system 0.2 Site excavation 0.12 Land 0.15 Intake canal to be used for water circulation 0.18 Safety location and underground utility 0.15 Plant for Crashing and batching 0.2 |
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1.3.2.4.4 Sub-contractors Subcontractors perform a significant role in warranting the success of projects and providing expert products and services. The chosen tenderer will warrant that all the subcontractors working with them meet the minimum specified requirements for all contractors, and are properly registered with the system as well as with their corresponding industry associations. The chosen tenderer will warrant that the subcontractor fulfills the AS 4120-1994 requirements and have the ability to fulfill their subcontracting work, together with financial, technical, human resources, and performance requirements |
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1.4 Confidentiality The submitted tenders will be managed in confidence; the review committee and the Principal will live up to the ethical procedures, including with the AS 4120-1994 requirements to safeguard the highest moral and trusted standards. The tenders also have to ensure they uphold discretion of the negotiations and communications with the project Principal. Price comparisons by different tenderers will not be used as a bargaining and negotiation base by the tender review committee or the Principal in general for the contract prices. |
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2. Financial Arrangements and Financing justification of the project by the Principal: |
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2.1 Source of funds Given the scope of the tender, the non-resource limited model of financing will not be used; instead, a different vehicle for financing. The BOT model (build-operate-transfer) will be used for financing; this is a model where private funds are utilized via a concession that can either be private or public for financing, designing, constructing, and operating the project as per the contract. |
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2.2 Project selection criteria The project is nominated grounded on the benchmark of value addition and meeting environmental and health conservation. I Australia, the nonrenewable coal is used for most of the power generation, which postures environmental and health risks (Letts, 2016) |
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3. Contractual terms |
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3.1 Nature of Contract This project will be modeled on the Engineering, Procurement, Construction model (EPC); this is the most appropriate form of agreement involving multifaceted public infrastructure projects. |
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3.2 Testing and Examination The Principal will propose individuals to inspect and check the plant and the set up solar thermal power plant to confirm compliance with the performance requirements. |
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3.3 Suspension of Works The works can be deferred if the tenderer fails to perform as per the project schedule of face major challenges, including legal proceedings and bankruptcy charges. The works can be suspended if there is a major natural disaster such as drought or a security scare until such issues are resolved |
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3.4 Liability for Defects The contractor will shoulder the responsibility for any defects throughout the construction of the solar thermal power plant, as per Gibson (2015) |
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3.5 Variations The chosen contractor is not at liberty to vary the project works as specified in the contract; however, in the event that the Superintended gives such a direction after a signed approval is given by the Superintendent, variations may be made. Further, if a variation that falls within the projects’ general scope is made by the contractor, then no problem. For any variations executed after the completion of the contract, the Principal is obligated to reimburse the contractor for the costs reasonably |
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3.6 Payments and Certificates Payments for work done, including reasonable costs for variations that are authorized by the project Superintendent and certified as being appropriately payable to the contractor, must be paid in conformance with contractual terms |
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3.7 Default or Insolvency The new insolvency laws recently enforced in Australia will affect insolvency and default issues in the contract; as such ipso facto clauses cannot be enforced wholesome in certain insolvency procedures (Kelly & Harding, 2017; Rowarth & Browne, 2018)). The insolvency of the contractor alone will not be sufficient enough reason for the Principal to enforce the ipso facto clauses and terminate the contract (‘Corrs, Chambers and Westgarth’, 2018) |
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3.8 Termination of Contract The construction contract can be ended if it is legally proven that the contractor has been rendered insolvent, or if there are serious breaches of the terms of the contract and construction regulations or if a specified clause for terminating the contract is activated after conditions for its activation are fulfilled (Association for International Arbitration, 2009) |
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3.9 Claims All claims are to be accomplished via the terms and conditions as stipulated in the project contract; there must be compliance with existing regulations and laws guiding contract claims, of which claims must be succinctly and accurately stated. As per AS 4120-1994, contract claims will be processed with speed and in fairness (Levy, 2010) |
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3.10 Dispute Resolution and Arbitration Every endeavor should be employed by all parties to the contract to resolve disputes; the contract governing the project should be written upfront, in a clear and concise manner, avoiding any ambiguity. The contract ought to be clear on however disputes are to be resolved. The popular technique of dispute resolution is arbitration in which all parties volunteer arguments and any other proof they may have to an arbitrator (a professional of dispute resolution); the arbitrator will then determine the issue based on the facts and give direction to resolve the dispute (Moens & Evans, 2015; Burr, 2018) |
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4. Quality Control and Assurance |
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4.1 Customer quality focus All parties involved in the project must be cognizant of quality parameters and endeavor to fulfill the requirements as stipulated in the quality management plan, under the guidance of the project manager who has the responsibility for ensuring quality requirements are met (Ruwanpura, Mohamed, & Lee, 2010) |
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4.2 Quality leadership The leader for ensuring quality is maintained is the project manager; working with other stakeholders and team members, the project manager will safeguard quality control and assurance through the use of various techniques and tools for quality management |
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4.3 Involvement of people The project will affect entre communities, and so people, especially those around the project area will be required to give inputs on how total quality can be assured. The entire project team will work to ensure quality is attained in the project, using principles such as knowledge management and learning as the project is executed |
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4.4 Process approach The process approach, which is based on the ISO 9001and ISO 9004 standards will be employed in ensuring the project is delivered on time and with the requisite quality as stipulated in the quality management plan and the quality requirements document (Tricker, 2013; Cochran, 2015) |
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4.5 Systems approach In addition to the process approach, systems approach will also be used in the project; the systems approach requires the use of systems thinking that mimics systems engineering in order to attain a holistic view of the project as a system made of discrete parts that work in unison and affect each other (Vidal & Marle, 2012). This approach is very suitable for complex projects as it helps minimize risks and enable better decision making, when various systems thinking tools are used (Thamhain, 2013). |
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4.6 Continuous improvement The use of continuous improvement processes has been shown to result in numerous benefits in construction projects; this means ongoing improvements in processes as the project is executed. This requires periodic reviews of issues and making amends in order to learn on the fly. The essential factors for its achievement include total management commitment, identifying improvement opportunities, effective communications, and using quality management systems, with a suitable framework such as TQM and Six Sigma (Smyth, 2010; Lifvergren & Bergm, 2012) |
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4.7 Mutual benefit The outcome must be of mutual benefit to Principle and contractors as well as to the public and environment |
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5. Safety requirements |
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5.1 Safety management review A safety management evaluation will be carried out to warrant the project is undertaken in an environment of safety; these must meet the OSH safety requirements. |
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5.2 OHS policy The project will implement the OSH policy standard of OHSAS18001:2007 to ensure the health and safety of staff, the community around the project location, and the environment is maintained. The project manager with a safety officer will train staff on the OSH principles, and develop a safety and health policy document at the work place that fulfills the OSH requirements |
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References Association for International Arbitration. (2009). Alternative dispute resolution in the energy sector. Antwerp: Maklu. Burr, A. (2018). Delay and disruption in construction contracts. Cochran, C. (2015). ISO 9001:2015 in plain english. ‘Corrs, Chambers and Westgarth’. (2018). Insolvency reform: stay of “Ipso Facto” provisions will provide breathing space for companies facing insolvency » Corrs Chambers Westgarth. Retrieved from https://www.corrs.com.au/publications/corrs-in-brief/insolvency-reform-stay-of-ipso-facto-provisions-will-provide-breathing-space-for-companies-facing-insolvency/ Eriksson, P. E. (2017). Procurement strategies for enhancing exploration and exploitation in construction projects. Journal of Financial Management of Property and Construction, 22(2), 211-230. doi:10.1108/jfmpc-05-2016-0018 Gibson, R. (2015). Practical guide to disruption and productivity loss on construction and engineering projects. Kelly, A., & Harding, C. (2017, November 3). New insolvency laws to impact construction contracts – Construction Blog. Retrieved from https://www.tglaw.com.au/construction/2017/11/01/53/ Letts, S. (2016, July 12). Coal still king despite renewable energy growth. Retrieved from https://www.abc.net.au/news/2016-07-12/coal-still-king-despite-renewable-energy-growth/7622028 Levy, S. M. (2010). Construction process planning and management: An owner’s guide to successful projects. Amsterdam: Butterworth-Heinemann. Lifvergren, S., & Bergm, B. (2012). Improving ‘Improvement’ by Refocusing Learning: Experiences from an -Initially- Unsuccessful Six Sigma Project in Healthcare. Total Quality Management and Six Sigma. doi:10.5772/46083 Moens, G., & Evans, P. (2015). Arbitration and dispute resolution in the resources sector: An Australian perspective. Cham: Springer. Rowarth, J., & Browne, A. (2018, March 5). New insolvency reforms are on the way: How will they affect you? – Financial Restructuring – Australia. Retrieved from https://www.mondaq.com/australia/x/679158/Insolvency+Bankruptcy/New+insolvency+reforms+are+on+the+way+How+will+they+affect+you Ruwanpura, J., Mohamed, Y., & Lee, S. H. (2010). Construction Research Congress 2010: Innovation for reshaping construction practice : proceedings of the 2010 Construction Research Congress, May 8-10, 2010, Banff, Alberta, Canada. Reston: American Society of Civil Engineers. Smyth, H. (2010). Construction industry performance improvement programmes: the UK case of demonstration projects in the ‘Continuous Improvement’ programme. Construction Management and Economics, 28(3), 255-270. doi:10.1080/01446190903505948 Tasmanian Government. (2017). Ethical Standards and Codes. Retrieved from https://www.purchasing.tas.gov.au/buying-for-government/purchasing-framework/purchasing-principles/ethical-standards-and-codes Thamhain, H. (2013, October 6). Managing Risks Complex Projects. Retrieved from https://www.pmi.org/learning/library/managing-risks-complex-projects-5452 Tricker, R. (2013). ISO 9001. Hoboken: Taylor and Francis. Uher, T. E., & Davenport, P. (2009). Fundamentals of building contract management. Sydney: UNSW Press. Vidal, L., & Marle, F. (2012). A systems thinking approach for project vulnerability management. Kybernetes, 41(1/2), 206-228. doi:10.1108/03684921211213043 |
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