The Pre-Award phase is the first phase of the contract management process. This is usually after the scope of works has been sufficiently defined and the Project Owner (“Employer”) is ready to go out to the market to solicit pricing for the works to be executed.

In the public sphere, there are regulatory compliance requirements managing this process. It is not the intent of this write up to delve into this sphere or the sphere of selecting suitable suppliers or contractors. Where the Employer must select suppliers or contractors, they should approach the market diligently and ensure that potential suppliers or contractors have the necessary skills and knowledge.

In the Pre-Award phase, there are important considerations for both the Employer and those pricing the works. This article highlights these factors and uses the premise that works have a project value of more than one million rand. Whilst these factors are also applicable to works of a lesser value, many Employers may omit some of them for smaller projects.

The Employer should ensure that they have sufficiently defined the scope of works as this will be the basis on which offers will be made. The Employer should be unambiguous in his requirements because the prices contained in the contract are based on the scope provided during the tender stage.  Any deviation from the contract after it has been awarded will likely result in additional costs and delays in completing the project.

The Employer should include at least the following in the invitation to tender:

1. Scope of works: Sufficiently defining the requirements and detailing the works to be done.
2. Pricing basis: On what basis is the Employer measuring payment? Is it a lump sum project, re-measurable or some other pricing strategy? It is recommended that the Employer includes a bill of quantities. The bill of quantities provides a tool to evaluate pricing. This is extremely useful when comparing multiple tenderers to the works.
3. Anticipated schedule: What will the duration of the works be? When is the project required to be completed?
4. What will the contract basis be? Will it be a standard term contract, for example, a MBSA or JBCC contract, or will it be a bespoke agreement? It is recommended that the Employer insert a copy of the terms and conditions or at least a stipulation of which standard form contract will apply.

In pricing the works, the Contractor should consider the following:

1. Understand the scope of works and ensure that all components are priced for.
2. Fill in any returnable documents, including any pricing document.
3. Specify the programme or schedule for the works.
4. Be clear as to what has been allowed for and what has been excluded.

Prior to awarding, it is imperative that the Employer conducts a proper evaluation of the proposals for works received. The time prior to awarding the contract should be used to iron out any areas of concern or ambiguity. A final negotiation should then be held between the parties to ensure a proper meeting of minds.

The evaluation criteria of the proposal may differ from Employer to Employer. These should however be constructed and adhered to.

The pre-award phase is integral for the successful contract management of the project. This phase stipulates how the project will run and if executed properly mitigates future claims under the contract.

Should you have any queries regarding contract management, please contact the Association.

Bilaal Dawood, Attorney