Northern Territory Report - November 2009

Value-for-money tender assessment has been around in the Territory for some five years now, and the advent of Federal Safety Commissioner and ABCC accreditation requirements for federally funded projects, similarly over the last three years. However, to many mid-scale contractors the tendering and relationship contracting landscape has changed. The rules of engagement are not always readily clear or necessarily comprehensible by mere mortals.
This is not to assert that the systems introduced are not in the long-term interests of our contracting fraternity, and the CCF supports development in our industry to either conform or find the ‘fit’ within the new environment. But for many, the challenge is to fully understand the systems at play, to attempt to stick to the knitting of contracts historically, traditionally won, and/or look for collaborations and partnerships with larger contractors who have achieved the level of accreditation demanded by clients for major infrastructure projects.
Just on this last point, for many federally funded contracts, the tendency is to group the funding of projects up, to attract FCS and ABCC accreditations, but then divide them down such that relatively low value projects, formerly the domain for at least bidding by mid-size contractors, are beyond immediate reach via the accreditation pathways.
So what’s the answer? Well, our line is that contractors should seek accreditations as far as practicable within the limitations of their resources and good commercial business practices. OH&S, quality and environmental management standards within companies, should be taken to the highest practical level and preferably to AS/ANZ standards, preferably under the CCF Civil Contracting Management Systems. And, where appropriate, to the levels stipulated by federal funder requirements.
At the end of the day, many contractors will be sub-contracting or in healthy and profitable and advantageous arrangements with others, whereby their standards will need to be evidenced through the tender and project delivery phases, as conforming to the overall obligations and commitment of the successful bidder and contractor.
Just for interest, the value-for-money assessments work roughly like this:
A typical project’s tender may be weighted along the following lines:

Price is handled by a ratio of lowest price/tender price, once the above criteria have been assessed.
So, the bottom line is that lowest price is not the sole determinant. In fact, if the above assessment criteria are not fully evidenced and total scores are adversely affected, then tender prices 10% or more above the lowest bid can easily achieve success as the winning overall value-for-money bid.
Accordingly, it is in every bidder’s interests to be fully apprised of the detail and quality of information required, under the non-monetary assessment criteria included in invitations to tender. Then they must be able to successfully demonstrate performance and commitments in relation to the works to be undertaken.