Construction procurement research:
Commercial reviews in the tender process of contractors
Samuel Laryea and Will Hughes
School of Construction Management and Engineering, University of Reading, Reading, UK RG6 6AW
Abstract
Purpose
The purpose of this paper is to show the extent to which clients amend standard form contracts in practice, the locus of the amendments, and how contractors respond to the amendments when putting together a bid.
Design/methodology/approach
Four live observational case studies were carried out in two of the top 20 UK construction firms. The whole process used to review the proposed terms and conditions of the contract was shadowed using participant observation, interview and documentary analysis.
Findings
All four cases showed strong evidence of amendments relating mostly to payment and contractual aspects: 83 amendments in Case Study 1 (CS1), 80 in CS2, 15 in CS3 and 29in CS4. This comprised clauses that were modified (37 per cent), substituted (23 per cent), deleted (7 per cent) and new additions (33 per cent). Risks inherent in the amendments were mostly addressed through contractual rather than price mechanisms, to reflect commercial imperatives. “Qualifications” and “clarifications” were included in the tender submissions for post-tender negotiations. Thus, the amendments did not necessarily influence price. There was no evidence of a “standard-form contract“ being used as such, although clients may draw on published “standard-form contracts” to derive the forms of contract actually used in practice.
Practical implications
Contractors should pay attention to clauses relating to contractual and financial aspects when reviewing tender documents. Clients should draft equitable payment and contractual terms and conditions to reduce risk of dispute. Indeed, it is prudent for clients not to pass on inestimable risks.
Originality/value
A better understanding of the extent and locus of amendments in standard form contracts, and how contractors respond, is provided.
Keywords: Project evaluation, Contracts, Risk management, United Kingdom.
About Me
- Samuel Laryea
- Johannesburg, Guateng, South Africa
- I am a Senior Lecturer in the School of Construction Economics and Management at University of the Witwatersrand, South Africa. In the past, I have been a Lecturer in the School of Construction Management and Engineering at the University of Reading, UK (2010-12); and also a Post-Doctoral Academic Fellow (2009) and Graduate Teaching Assistant (2008). I completed my PhD at University of Reading in Dec 2008 on the relationship between risk and price in tendering. Prior to transferring to Reading in Jan 2008, I was an MPhil/PhD student at KNUST, Ghana (2004-07). I gained my undergraduate degree in Building Technology from Kwame Nkrumah University of Science and Technology (KNUST), Ghana in 1998-2002. During school days, my peers elected me to serve in several leadership positions including SRC President at KNUST. From 1994-96, I attended Suhum Sec. Tech. School after basic education at schools in Ghana and Nigeria. I did my National Service with the Fanteakwa District Assembly in 2002-03. After that, I worked at the Development Office of KNUST until I started my PhD in 2004. I am a co-organiser for the WABER Conference and an author of 30+ research publications.
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