Procurement Strategy Finalisation

Section 1

Purpose

Note on JCT editions: JCT has published the 2024 Edition. This guidance cites JCT SBC/Q 2016 clause references; the commercial and payment mechanisms are substantively unchanged in the 2024 edition, but specific clause references should be verified against the contract edition in use on any given project.

The procurement strategy must be finalised at RIBA Stage 3 Spatial Coordination. Delaying this decision to Stage 4 compresses the pre-tender period, restricts the available routes, and may force a sub-optimal choice under programme pressure. The QS advises the client on the most appropriate procurement route, contract form and tendering method, having regard to the project's programme, cost certainty requirements, design responsibility, client sophistication, and risk allocation preferences — all of which are substantially clearer at Stage 3 than at earlier stages.

The procurement decision fundamentally affects the allocation of risk between the client and contractor. Under traditional procurement (JCT SBC/Q), the client retains design risk and achieves price certainty only at tender; under Design and Build (JCT DB 2016), design risk transfers to the contractor at an earlier stage, typically at a cost premium. NEC4 contracts offer an alliance/collaborative approach with options spanning lump sum (Option A) to cost reimbursement (Option E). Each route has materially different implications for the QS's ongoing role.

RICS Management of Risk (1st edition, 2020) explicitly addresses the relationship between procurement route and risk allocation, confirming that the selection of procurement strategy is itself a risk management decision. The Stage 3 Risk Register informs this choice: a project with high residual design risk is poorly suited to a fixed-price D&B arrangement; one with stable, well-defined design is poorly suited to cost-reimbursement contracting.

Section 2

Key Principles

RICS Tendering Strategies (RICS guidance note, 1st edition, 2014): guidance on selecting and implementing tendering strategies across all main procurement routes; covers single-stage, two-stage, negotiated and framework approaches.
JCT Standard Building Contract with Quantities (SBC/Q, 2016 edition): the principal traditional procurement contract for building works in England and Wales; design responsibility rests with the client's design team.
JCT Design and Build Contract (DB, 2016 edition): transfers design responsibility and price risk to the contractor following the Employer's Requirements; typically used where early price certainty is the client's primary objective.
NEC4 Engineering and Construction Contract (2017): suite of contracts covering Options A–F (lump sum, remeasured, cost reimbursable, target cost, management contract, PSC); widely used in public sector and infrastructure.
RICS Management of Risk (1st edition, 2020): Section 2.3 — Procurement routes and risk: confirms the relationship between contract type and risk transfer; identifies the QS's role in advising on risk allocation under each route.
Public Contracts Regulations 2015 (SI 2015/102): mandatory procurement rules for contracting authorities above EU threshold values (works: £5.372m as of 2024); defines open, restricted, competitive dialogue and competitive procedure with negotiation.
Construction (Design and Management) Regulations 2015 (CDM 2015): the Principal Contractor must be appointed before construction phase commences; procurement strategy must allow sufficient time for pre-construction CDM compliance.

Section 3

Practical Application

Step 1

Review the client's procurement objectives against four drivers: (i) time — does the programme require early contractor involvement or an accelerated tender process? (ii) cost certainty — does the client need a fixed price at contract award, or can they accept remeasurement or cost reimbursement? (iii) design responsibility — does the client wish to retain full design control, or transfer design and specification risk to the contractor? (iv) quality — what level of specification control does the client require post-contract?

Step 2

Assess the suitability of each main procurement route: Traditional (JCT SBC/Q) — client retains design; maximum specification control; price certainty at tender; higher QS workload (bills of quantities, post-contract administration); suited to complex, well-specified projects. Design and Build (JCT DB) — contractor takes design responsibility; early price certainty; reduced QS post-contract role; specification control limited to Employer's Requirements; suited to repetitive or time-pressured projects. Management Contracting/Construction Management — early contractor involvement; cost reimbursable; maximum flexibility; suited to fast-track, complex or phased projects with high change risk.

Step 3

Assess single-stage vs two-stage tendering: single-stage (all pricing information available at tender; fully competitive; higher cost certainty; longer pre-contract period) vs two-stage (contractor selected on first-stage preliminaries and overhead/profit; second stage prices subcontract packages; enables early contractor involvement before design is complete; lower initial cost certainty; suited to D&B or complex projects where early contractor input adds value).

Step 4

Review the Stage 3 Risk Register to inform the risk allocation implications of each route. Identify risks that are best managed by the contractor (construction method, ground risk where investigation is complete), risks that are best retained by the client (brief changes, third-party agreements), and risks that require insurance or bonding rather than contractual transfer.

Step 5

Confirm the contract form: for traditional procurement, consider JCT SBC/Q 2016 (with or without contractor's designed portion CDP); for D&B, JCT DB 2016; for public sector/infrastructure, NEC4 Option A or C. Consider whether standard amendments are required (PCSA for two-stage; bespoke risk schedule; collateral warranties).

Step 6

Define the tendering strategy: confirm the number of tenderers (typically 3–6); open competition vs pre-qualification vs framework; PQQ/SQ criteria; OJEU/Find a Tender notification if above public procurement thresholds. Prepare a tender programme showing dates from issue of tender documents to contract award.

Step 7

Advise on packaging strategy: confirm whether the works will be let as a single prime contract or in separate packages (e.g. shell and core separately from fit-out; civils separately from building). Multi-package strategies increase client-side coordination risk but may allow greater market competition and phased contract award.

Step 8

Document the procurement strategy recommendation in a formal Procurement Strategy Report: cover procurement objectives, route assessment (advantages/disadvantages per route), recommended route with rationale, contract form, tendering method, tender programme, packaging strategy, and risk allocation summary. Obtain client approval before Stage 4 commences.

Section 4

Common Mistakes to Avoid

Deferring the procurement decision to Stage 4 — this compresses the tender programme, restricts route options, and may prevent proper pre-qualification, OJEU notification (if applicable) or two-stage tendering from being properly implemented.
Recommending D&B on a project with significant outstanding design risk — transferring design responsibility to a contractor before the design is sufficiently developed results in loss of specification control, disputes over Employer's Requirements interpretation, and contractor-driven value engineering post-contract.
Failing to consider public procurement regulations — for public sector clients above threshold, the open, restricted or competitive dialogue procedure must be followed; failure to comply can result in mandatory standstill periods, challenge, and procurement restart.
Selecting a contract form without advising on the implications for the QS's post-contract role — the client must understand that a D&B contract substantially reduces the QS's cost management role unless a specific post-contract QS scope is agreed.
Confusing management contracting (contractor manages domestic subcontractors for a fee; client holds subcontracts) with construction management (client holds all trade contracts directly; CM provides coordination only) — the risk and cost implications are materially different.
Not aligning CDM Principal Contractor appointment with the procurement programme — CDM 2015 requires the Principal Contractor to be appointed before the construction phase commences; a compressed procurement programme must still allow time for this legal obligation to be met.

Section 5

APC Competency & Quick Reference

APC Competencies: Procurement & Tendering (L2) | Cost Management (L2) | Legal & Regulatory Compliance (L1) | Programming & Planning (L1)

What are the four main factors a QS uses to advise on procurement route selection?

Time (programme requirements; early contractor involvement vs full-design-before-tender); Cost certainty (fixed lump sum at award vs remeasurement vs cost reimbursement); Design responsibility (client retains design — traditional; contractor takes design — D&B; shared — NEC4 Target Cost); and Quality (degree of specification control required post-contract). These four drivers are assessed against the client's priority hierarchy.

What is the difference between single-stage and two-stage tendering?

Single-stage: all pricing information provided at tender; fully competitive; higher cost certainty; longer pre-contract period — suited to well-specified, traditionally procured projects. Two-stage: contractors selected on Stage 1 (preliminaries, OHP, method statement); contractor works with design team during Stage 2 to price subcontract packages and agree GMP/fixed price — enables early contractor involvement but reduces initial cost certainty; suited to D&B, complex or fast-track projects.

When do the Public Contracts Regulations 2015 apply?

The Regulations apply to contracting authorities (public bodies) awarding contracts above the OJEU/Find a Tender threshold values. For works contracts, the 2024 threshold is approximately £5.372m (reviewed biennially). Above threshold, the authority must follow a regulated procedure (open, restricted, competitive dialogue or competitive procedure with negotiation). Below threshold, national rules apply, but competition principles still apply.

Section 6

Procurement Strategy Checklist

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Client's procurement objectives assessed (time, cost certainty, design responsibility, quality)

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Main procurement routes assessed (Traditional, D&B, Management, NEC4) with advantages/disadvantages

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Stage 3 Risk Register reviewed for risk allocation implications of each route

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Single-stage vs two-stage tendering assessed and recommendation made

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Contract form selected and confirmed (JCT SBC/Q, JCT DB, NEC4 Option)

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Tendering strategy defined (open/restricted/framework; number of tenderers; PQQ criteria)

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Public procurement regulations checked (Public Contracts Regulations 2015 thresholds)

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Packaging strategy confirmed (single prime contract or multi-package approach)

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CDM Principal Contractor appointment timing confirmed in tender programme

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Procurement Strategy Report issued and client approval obtained

Section 7

CPD Learning Outcomes

Assess the suitability of traditional, Design and Build, management and NEC4 procurement routes against a client's time, cost certainty, design responsibility and quality objectives, and produce a documented Procurement Strategy Report.
Explain the risk allocation implications of different procurement routes using the RICS Management of Risk framework, and identify how the Stage 3 Risk Register informs the procurement strategy recommendation.
Identify the application of the Public Contracts Regulations 2015 to public sector clients, and advise on the appropriate tendering procedure (open, restricted, competitive dialogue) relative to contract value thresholds.

Section 8