Procurement and Tendering Strategy
5 minutes
5 Questions
In the PMI Construction Professional (PMI-CP) framework, Procurement and Tendering Strategy is a critical part of the Contract Lifecycle and Delivery Methods domain. It covers how an owner or contractor plans, structures, and executes the acquisition of design, construction, equipment, and services to deliver project objectives at the best value with acceptable risk. The strategy begins during project initiation and planning, when the team analyzes scope maturity, schedule constraints, budget certainty, market conditions, regulatory requirements, and the owner's appetite for risk and involvement. These factors drive the choice of delivery method, such as Design-Bid-Build, Design-Build, Construction Management at Risk, Engineering-Procurement-Construction (EPC), or Integrated Project Delivery. They also shape the contract pricing model, whether lump sum, unit price, cost-plus, guaranteed maximum price, or target cost. Tendering strategy defines how suppliers are selected. Options include open competitive bidding, selective or prequalified tendering, negotiated contracts, two-stage tendering, framework agreements, and best-value or qualifications-based selection. A PMI-CP practitioner must establish clear prequalification criteria, prepare complete tender documents (instructions to bidders, specifications, drawings, bills of quantities, and contract conditions), and define transparent evaluation methods that balance price, technical capability, safety record, financial stability, and schedule performance. Key considerations include packaging work to suit market capacity, allocating risk to the party best able to manage it, early contractor involvement to improve constructability, and ensuring fairness, ethics, and compliance with procurement laws. Effective clarification processes, bid leveling, and negotiation lead to contract award and a smooth transition into contract administration. Ultimately, a well-designed procurement and tendering strategy aligns commercial arrangements with project goals, reduces disputes and change orders, encourages collaboration, and lays the foundation for successful delivery, claims avoidance, and stakeholder satisfaction throughout the construction contract lifecycle.
Procurement and Tendering Strategy: A Complete Guide for the PMI-CP Exam
Introduction
Procurement and Tendering Strategy is a core topic in the Contract Lifecycle and Delivery Methods domain of the PMI Construction Professional (PMI-CP) certification. It covers how an owner or contractor decides what to buy, how to buy it, from whom, under which contract form, and by what process bidders are invited, evaluated and awarded. In construction, most project value flows through contracts, so procurement decisions shape cost, schedule, quality, risk and relationships for the whole project.
1. Why Procurement and Tendering Strategy Is Important
It sets risk allocation: The delivery method and contract type decide who carries design, quantity, price, ground-condition and schedule risk. Poor allocation leads to inflated bids, claims and disputes.
It drives value for money: A good strategy balances price, quality, capability and lifecycle cost, not just the lowest bid.
It affects schedule: Some routes, such as Design-Build, fast-tracking and early contractor involvement, compress timelines. Traditional Design-Bid-Build is sequential and slower.
It protects governance and compliance: Public and regulated projects must follow procurement law, transparency rules and audit requirements. A defensible process reduces the risk of bid protests.
It shapes collaboration: Relational models such as IPD, alliancing and partnering build trust. Transactional models can create adversarial behavior.
It reduces disputes: Clear scope, sensible packaging and fair evaluation lower the chance of change orders, claims and litigation.
It supports market engagement: Packaging work to fit market capacity increases competition and lowers prices.
2. What Procurement and Tendering Strategy Is
Procurement strategy is the high-level plan for acquiring works, goods and services. It defines the delivery method, contract type, packaging, sourcing approach and evaluation philosophy. It is usually documented in a Procurement Management Plan or Contracting Strategy.
Tendering strategy is the tactical process of running the competition: prequalification, solicitation documents, bidder communication, bid receipt, evaluation, negotiation and award.
Key components:
- Make-or-buy analysis: Should work be done in-house or contracted out?
- Delivery method: The overall structure of design and construction responsibility.
- Contract (pricing) type: How the contractor will be paid.
- Packaging: How scope is split into contracts, such as a single prime contract, multiple primes or trade packages.
- Sourcing method: Open, selective, negotiated, two-stage, framework or sole source.
- Evaluation and award criteria: Lowest price, best value, MEAT (Most Economically Advantageous Tender) or QBS (Qualifications-Based Selection).
- Contract conditions: Standard forms such as FIDIC, NEC, AIA, ConsensusDocs or JCT, and any amendments.
3. How It Works: Delivery Methods
Design-Bid-Build (DBB): The owner hires a designer, completes the design, then tenders for a contractor. Pros: price certainty at award, strong owner control of design, clear competition. Cons: long sequential timeline, no contractor input during design, a higher risk of change orders from design errors. The owner carries design risk.
Design-Build (DB): A single entity is responsible for both design and construction. Pros: single point of responsibility, faster delivery, fewer design-construction disputes. Cons: less owner control over design detail, so the owner must write a strong performance specification or Owner's Project Requirements.
Construction Manager at Risk (CMAR) / CM-GC: The CM joins early to advise on design, constructability and cost, then commits to a Guaranteed Maximum Price (GMP) and builds. Pros: early contractor input, fast-tracking, cost transparency. Cons: negotiating the GMP can be complex.
Construction Management Agency (CM-Agency): The CM acts only as the owner's advisor. The owner holds the trade contracts and keeps the cost risk.
Engineering, Procurement and Construction (EPC) / Turnkey: The contractor delivers a complete, functioning facility, often at a lump sum. The contractor carries high risk, which is common in energy and process plants.
Integrated Project Delivery (IPD) / Alliancing: A multi-party agreement with shared risk and reward, collaborative decision making, BIM and lean practices. It works best for complex projects where uncertainty is high and trust is essential.
Public-Private Partnership (PPP) / DBFOM: A private partner designs, builds, finances, operates and maintains the asset over a long concession. Revenue risk and lifecycle risk move to the private partner.
4. How It Works: Contract Pricing Types
Lump Sum / Fixed Price: One price for a defined scope. It suits a well-defined design. The contractor carries cost risk, and the owner gets price certainty. Change control must be strict.
Unit Price / Remeasurement: Payment is per measured unit using a bill of quantities. It suits work where quantities are uncertain, such as earthworks or roads. The owner carries quantity risk, and the contractor carries rate risk.
Cost-Reimbursable (Cost Plus): The owner pays actual costs plus a fee. Variants are Cost Plus Fixed Fee, Cost Plus Percentage of Cost (avoid this, because it rewards spending), Cost Plus Incentive Fee and Cost Plus Award Fee. It suits undefined scope or emergencies. The owner carries most of the risk.
Guaranteed Maximum Price (GMP): Cost-reimbursable work up to a cap, often with shared savings. It is common with CMAR.
Target Cost with Pain/Gain Share: Overruns and underruns are shared by an agreed formula, as in NEC Options C and D. It encourages collaboration.
Time and Materials: A hybrid used for small or uncertain work. A not-to-exceed limit should be set.
Rule of thumb: As scope definition increases, move toward fixed price. As uncertainty increases, move toward cost-reimbursable or target cost. Allocate each risk to the party best able to manage it.
5. How It Works: Tendering Methods
Open tendering: Any qualified bidder may respond. It maximizes competition and transparency, but evaluation is costly and quality may be mixed.
Selective (restricted) tendering: Bidders are prequalified and shortlisted, usually 3 to 6 firms. It balances competition with capability.
Negotiated tendering / sole source: The owner negotiates with one party. It is justified for specialist work, urgency, continuity or proprietary systems. Transparency is low, so the justification must be documented.
Two-stage tendering: Stage 1 selects a contractor on qualifications, preliminaries and fees, enabling early involvement. Stage 2 agrees the full price once the design develops.
Framework agreements / IDIQ: Pre-agreed terms with selected suppliers for repeated call-off work. Procurement time per project is reduced.
Competitive dialogue / negotiation: Used for complex projects where the solution is not fully known, common in PPPs.
6. The Tendering Process Step by Step
1. Needs assessment and make-or-buy: Confirm the requirement, budget and constraints.
2. Market analysis: Check supplier capacity, pricing trends, supply chain risk and local content rules.
3. Select the strategy: Choose the delivery method, contract type, packaging and evaluation model, and get approval.
4. Prequalification (RFQ/RFI): Assess financial stability, safety record (such as EMR and TRIR), experience, capacity, bonding capacity, insurance and references.
5. Prepare solicitation documents: Invitation to Bid (ITB) or Request for Proposal (RFP), instructions to bidders, scope, drawings, specifications, contract conditions, evaluation criteria, forms and bond requirements.
6. Issue and manage the bid period: Hold pre-bid meetings and site visits, and answer clarifications. Issue addenda so that every bidder receives the same information.
7. Bid receipt and opening: Record submissions against a firm deadline. Public sector opening is often public for sealed bids.
8. Evaluation: Check compliance and responsiveness, carry out technical scoring, then commercial evaluation. Use bid leveling to normalize scope gaps, exclusions and qualifications. Check for abnormally low bids.
9. Clarification and negotiation: Where permitted, hold best and final offers (BAFO).
10. Award: Issue the notice of intent to award, observe the standstill period where required, then send the letter of acceptance and execute the contract.
11. Debrief unsuccessful bidders: This maintains market goodwill and reduces protests.
12. Handover to contract administration: Hold a kickoff meeting, collect performance bonds and insurance certificates, and set up the baseline.
7. Evaluation Approaches
Lowest price technically acceptable (LPTA): Suited to simple, well-defined work.
Best value / MEAT: A weighted combination of price and quality, such as 60/40 or 70/30. Typical criteria are methodology, team, schedule, safety, past performance and sustainability.
Qualifications-Based Selection (QBS): Common for design services. The firm is selected on qualifications first, then the fee is negotiated.
Weighted scoring model: Criteria and weights are defined and disclosed before bids are received. Evaluators score independently and then moderate.
Lifecycle or whole-life costing: Considers operating and maintenance costs, not just capital cost.
8. Security, Risk and Ethics in Tendering
Bid bond (tender security): Ensures the bidder will sign if awarded.
Performance bond: Secures completion of the work.
Payment bond: Protects subcontractors and suppliers.
Retention and advance payment guarantees: Further financial protections.
Ethics: Prevent bid rigging, collusion, cover pricing and conflicts of interest. Keep the process confidential and treat all bidders equally. Never engage in bid shopping, which means disclosing one bidder's price to another to drive prices down. The PMI Code of Ethics values of responsibility, respect, fairness and honesty apply directly.
9. Contractor-Side Tendering Strategy
The PMI-CP also tests the contractor's view:
- The bid/no-bid decision considers strategic fit, capacity, risk, competition, client relationship and probability of winning.
- Estimating covers takeoff, subcontractor quotes, contingency and markup.
- Risk review should flag onerous clauses and add qualifications or exclusions carefully, because too many can make a bid non-responsive.
- Win strategy and value engineering offers can strengthen the bid.
- Avoid unbalanced bidding, such as front-loading or manipulating rates, which owners may reject.
10. Exam Tips: Answering Questions on Procurement and Tendering Strategy
Tip 1: Match the method to the scenario. Look for clues in the question:
- 'Design complete, price certainty needed' points to DBB with lump sum.
- 'Need speed, single point of responsibility' points to Design-Build.
- 'Want contractor input early, cost transparency' points to CMAR with GMP, or two-stage tendering.
- 'Scope unclear, emergency' points to cost-reimbursable or T&M with a not-to-exceed limit.
- 'Quantities uncertain' points to unit price.
- 'Highly complex, collaborative, shared risk' points to IPD, alliancing or target cost.
- 'Repeated similar work' points to a framework or IDIQ.
- 'Owner wants operation and financing transferred' points to PPP or DBFOM.
Tip 2: Think risk allocation. Ask who carries the risk under each option. Fixed price means the contractor carries the risk. Cost plus means the owner does. The best answer allocates risk to the party best able to control it.
Tip 3: Choose fairness and transparency. When a question involves a bidder query, issue an addendum to all bidders. Never share one bidder's information with another, and never change evaluation criteria after bids are opened.
Tip 4: Follow the process sequence. Plan, analyze the market, prequalify, solicit, evaluate, award, then contract. If an option skips planning or approval, it is usually wrong.
Tip 5: Lowest price is not always correct. For complex or high-risk work, PMI favors best value. Watch for abnormally low bids, which signal risk of claims or default.
Tip 6: Consult the documents first. Many questions are solved by checking the procurement management plan, the instructions to bidders or the contract terms before acting.
Tip 7: Handle ethics issues decisively. If collusion, a conflict of interest or a gift is suggested, the answer is to disclose, escalate or recuse according to policy. Ignoring the issue or acting unilaterally is wrong.
Tip 8: Know the terms. Be clear on responsive versus responsible bidders, addenda versus change orders, bid bond versus performance bond, GMP versus lump sum, and RFI versus RFQ versus RFP versus ITB.
Tip 9: Use stakeholder and legal context. Public projects have strict rules, such as sealed bids, mandated evaluation and protest rights. Private projects allow more negotiation.
Tip 10: Eliminate extreme answers. Options that terminate, sue or re-tender immediately are rarely the first step. Prefer clarification, analysis and following the agreed process.
Tip 11: Watch the timing. A question may ask what to do first, next or best. Read carefully and choose the action that fits that stage of the lifecycle.
11. Quick Example
Scenario: An owner must open a hospital wing within 18 months. The design is only 30 percent complete, and the owner wants contractor expertise and cost visibility. What procurement strategy is most appropriate?
Answer reasoning: DBB is too slow and the design is incomplete. Pure lump sum is unsuitable at 30 percent design. CMAR with a GMP, or progressive Design-Build, gives early involvement, fast-tracking and open-book cost transparency. Select the CM using best value criteria.
Summary
Procurement and Tendering Strategy turns project objectives into a contracting approach. Choose the delivery method and contract type based on scope definition, schedule, risk appetite and owner capability. Run a fair, transparent and documented tender process, and evaluate on value rather than price alone. In the exam, read the scenario clues, think about risk allocation, follow the process and choose the ethical, collaborative and compliant option.
Procurement and Tendering Strategy is a core topic in the Contract Lifecycle and Delivery Methods domain of the PMI Construction Professional (PMI-CP) certification. It covers how an owner or contractor decides what to buy, how to buy it, from whom, under which contract form, and by what process bidders are invited, evaluated and awarded. In construction, most project value flows through contracts, so procurement decisions shape cost, schedule, quality, risk and relationships for the whole project.
1. Why Procurement and Tendering Strategy Is Important
It sets risk allocation: The delivery method and contract type decide who carries design, quantity, price, ground-condition and schedule risk. Poor allocation leads to inflated bids, claims and disputes.
It drives value for money: A good strategy balances price, quality, capability and lifecycle cost, not just the lowest bid.
It affects schedule: Some routes, such as Design-Build, fast-tracking and early contractor involvement, compress timelines. Traditional Design-Bid-Build is sequential and slower.
It protects governance and compliance: Public and regulated projects must follow procurement law, transparency rules and audit requirements. A defensible process reduces the risk of bid protests.
It shapes collaboration: Relational models such as IPD, alliancing and partnering build trust. Transactional models can create adversarial behavior.
It reduces disputes: Clear scope, sensible packaging and fair evaluation lower the chance of change orders, claims and litigation.
It supports market engagement: Packaging work to fit market capacity increases competition and lowers prices.
2. What Procurement and Tendering Strategy Is
Procurement strategy is the high-level plan for acquiring works, goods and services. It defines the delivery method, contract type, packaging, sourcing approach and evaluation philosophy. It is usually documented in a Procurement Management Plan or Contracting Strategy.
Tendering strategy is the tactical process of running the competition: prequalification, solicitation documents, bidder communication, bid receipt, evaluation, negotiation and award.
Key components:
- Make-or-buy analysis: Should work be done in-house or contracted out?
- Delivery method: The overall structure of design and construction responsibility.
- Contract (pricing) type: How the contractor will be paid.
- Packaging: How scope is split into contracts, such as a single prime contract, multiple primes or trade packages.
- Sourcing method: Open, selective, negotiated, two-stage, framework or sole source.
- Evaluation and award criteria: Lowest price, best value, MEAT (Most Economically Advantageous Tender) or QBS (Qualifications-Based Selection).
- Contract conditions: Standard forms such as FIDIC, NEC, AIA, ConsensusDocs or JCT, and any amendments.
3. How It Works: Delivery Methods
Design-Bid-Build (DBB): The owner hires a designer, completes the design, then tenders for a contractor. Pros: price certainty at award, strong owner control of design, clear competition. Cons: long sequential timeline, no contractor input during design, a higher risk of change orders from design errors. The owner carries design risk.
Design-Build (DB): A single entity is responsible for both design and construction. Pros: single point of responsibility, faster delivery, fewer design-construction disputes. Cons: less owner control over design detail, so the owner must write a strong performance specification or Owner's Project Requirements.
Construction Manager at Risk (CMAR) / CM-GC: The CM joins early to advise on design, constructability and cost, then commits to a Guaranteed Maximum Price (GMP) and builds. Pros: early contractor input, fast-tracking, cost transparency. Cons: negotiating the GMP can be complex.
Construction Management Agency (CM-Agency): The CM acts only as the owner's advisor. The owner holds the trade contracts and keeps the cost risk.
Engineering, Procurement and Construction (EPC) / Turnkey: The contractor delivers a complete, functioning facility, often at a lump sum. The contractor carries high risk, which is common in energy and process plants.
Integrated Project Delivery (IPD) / Alliancing: A multi-party agreement with shared risk and reward, collaborative decision making, BIM and lean practices. It works best for complex projects where uncertainty is high and trust is essential.
Public-Private Partnership (PPP) / DBFOM: A private partner designs, builds, finances, operates and maintains the asset over a long concession. Revenue risk and lifecycle risk move to the private partner.
4. How It Works: Contract Pricing Types
Lump Sum / Fixed Price: One price for a defined scope. It suits a well-defined design. The contractor carries cost risk, and the owner gets price certainty. Change control must be strict.
Unit Price / Remeasurement: Payment is per measured unit using a bill of quantities. It suits work where quantities are uncertain, such as earthworks or roads. The owner carries quantity risk, and the contractor carries rate risk.
Cost-Reimbursable (Cost Plus): The owner pays actual costs plus a fee. Variants are Cost Plus Fixed Fee, Cost Plus Percentage of Cost (avoid this, because it rewards spending), Cost Plus Incentive Fee and Cost Plus Award Fee. It suits undefined scope or emergencies. The owner carries most of the risk.
Guaranteed Maximum Price (GMP): Cost-reimbursable work up to a cap, often with shared savings. It is common with CMAR.
Target Cost with Pain/Gain Share: Overruns and underruns are shared by an agreed formula, as in NEC Options C and D. It encourages collaboration.
Time and Materials: A hybrid used for small or uncertain work. A not-to-exceed limit should be set.
Rule of thumb: As scope definition increases, move toward fixed price. As uncertainty increases, move toward cost-reimbursable or target cost. Allocate each risk to the party best able to manage it.
5. How It Works: Tendering Methods
Open tendering: Any qualified bidder may respond. It maximizes competition and transparency, but evaluation is costly and quality may be mixed.
Selective (restricted) tendering: Bidders are prequalified and shortlisted, usually 3 to 6 firms. It balances competition with capability.
Negotiated tendering / sole source: The owner negotiates with one party. It is justified for specialist work, urgency, continuity or proprietary systems. Transparency is low, so the justification must be documented.
Two-stage tendering: Stage 1 selects a contractor on qualifications, preliminaries and fees, enabling early involvement. Stage 2 agrees the full price once the design develops.
Framework agreements / IDIQ: Pre-agreed terms with selected suppliers for repeated call-off work. Procurement time per project is reduced.
Competitive dialogue / negotiation: Used for complex projects where the solution is not fully known, common in PPPs.
6. The Tendering Process Step by Step
1. Needs assessment and make-or-buy: Confirm the requirement, budget and constraints.
2. Market analysis: Check supplier capacity, pricing trends, supply chain risk and local content rules.
3. Select the strategy: Choose the delivery method, contract type, packaging and evaluation model, and get approval.
4. Prequalification (RFQ/RFI): Assess financial stability, safety record (such as EMR and TRIR), experience, capacity, bonding capacity, insurance and references.
5. Prepare solicitation documents: Invitation to Bid (ITB) or Request for Proposal (RFP), instructions to bidders, scope, drawings, specifications, contract conditions, evaluation criteria, forms and bond requirements.
6. Issue and manage the bid period: Hold pre-bid meetings and site visits, and answer clarifications. Issue addenda so that every bidder receives the same information.
7. Bid receipt and opening: Record submissions against a firm deadline. Public sector opening is often public for sealed bids.
8. Evaluation: Check compliance and responsiveness, carry out technical scoring, then commercial evaluation. Use bid leveling to normalize scope gaps, exclusions and qualifications. Check for abnormally low bids.
9. Clarification and negotiation: Where permitted, hold best and final offers (BAFO).
10. Award: Issue the notice of intent to award, observe the standstill period where required, then send the letter of acceptance and execute the contract.
11. Debrief unsuccessful bidders: This maintains market goodwill and reduces protests.
12. Handover to contract administration: Hold a kickoff meeting, collect performance bonds and insurance certificates, and set up the baseline.
7. Evaluation Approaches
Lowest price technically acceptable (LPTA): Suited to simple, well-defined work.
Best value / MEAT: A weighted combination of price and quality, such as 60/40 or 70/30. Typical criteria are methodology, team, schedule, safety, past performance and sustainability.
Qualifications-Based Selection (QBS): Common for design services. The firm is selected on qualifications first, then the fee is negotiated.
Weighted scoring model: Criteria and weights are defined and disclosed before bids are received. Evaluators score independently and then moderate.
Lifecycle or whole-life costing: Considers operating and maintenance costs, not just capital cost.
8. Security, Risk and Ethics in Tendering
Bid bond (tender security): Ensures the bidder will sign if awarded.
Performance bond: Secures completion of the work.
Payment bond: Protects subcontractors and suppliers.
Retention and advance payment guarantees: Further financial protections.
Ethics: Prevent bid rigging, collusion, cover pricing and conflicts of interest. Keep the process confidential and treat all bidders equally. Never engage in bid shopping, which means disclosing one bidder's price to another to drive prices down. The PMI Code of Ethics values of responsibility, respect, fairness and honesty apply directly.
9. Contractor-Side Tendering Strategy
The PMI-CP also tests the contractor's view:
- The bid/no-bid decision considers strategic fit, capacity, risk, competition, client relationship and probability of winning.
- Estimating covers takeoff, subcontractor quotes, contingency and markup.
- Risk review should flag onerous clauses and add qualifications or exclusions carefully, because too many can make a bid non-responsive.
- Win strategy and value engineering offers can strengthen the bid.
- Avoid unbalanced bidding, such as front-loading or manipulating rates, which owners may reject.
10. Exam Tips: Answering Questions on Procurement and Tendering Strategy
Tip 1: Match the method to the scenario. Look for clues in the question:
- 'Design complete, price certainty needed' points to DBB with lump sum.
- 'Need speed, single point of responsibility' points to Design-Build.
- 'Want contractor input early, cost transparency' points to CMAR with GMP, or two-stage tendering.
- 'Scope unclear, emergency' points to cost-reimbursable or T&M with a not-to-exceed limit.
- 'Quantities uncertain' points to unit price.
- 'Highly complex, collaborative, shared risk' points to IPD, alliancing or target cost.
- 'Repeated similar work' points to a framework or IDIQ.
- 'Owner wants operation and financing transferred' points to PPP or DBFOM.
Tip 2: Think risk allocation. Ask who carries the risk under each option. Fixed price means the contractor carries the risk. Cost plus means the owner does. The best answer allocates risk to the party best able to control it.
Tip 3: Choose fairness and transparency. When a question involves a bidder query, issue an addendum to all bidders. Never share one bidder's information with another, and never change evaluation criteria after bids are opened.
Tip 4: Follow the process sequence. Plan, analyze the market, prequalify, solicit, evaluate, award, then contract. If an option skips planning or approval, it is usually wrong.
Tip 5: Lowest price is not always correct. For complex or high-risk work, PMI favors best value. Watch for abnormally low bids, which signal risk of claims or default.
Tip 6: Consult the documents first. Many questions are solved by checking the procurement management plan, the instructions to bidders or the contract terms before acting.
Tip 7: Handle ethics issues decisively. If collusion, a conflict of interest or a gift is suggested, the answer is to disclose, escalate or recuse according to policy. Ignoring the issue or acting unilaterally is wrong.
Tip 8: Know the terms. Be clear on responsive versus responsible bidders, addenda versus change orders, bid bond versus performance bond, GMP versus lump sum, and RFI versus RFQ versus RFP versus ITB.
Tip 9: Use stakeholder and legal context. Public projects have strict rules, such as sealed bids, mandated evaluation and protest rights. Private projects allow more negotiation.
Tip 10: Eliminate extreme answers. Options that terminate, sue or re-tender immediately are rarely the first step. Prefer clarification, analysis and following the agreed process.
Tip 11: Watch the timing. A question may ask what to do first, next or best. Read carefully and choose the action that fits that stage of the lifecycle.
11. Quick Example
Scenario: An owner must open a hospital wing within 18 months. The design is only 30 percent complete, and the owner wants contractor expertise and cost visibility. What procurement strategy is most appropriate?
Answer reasoning: DBB is too slow and the design is incomplete. Pure lump sum is unsuitable at 30 percent design. CMAR with a GMP, or progressive Design-Build, gives early involvement, fast-tracking and open-book cost transparency. Select the CM using best value criteria.
Summary
Procurement and Tendering Strategy turns project objectives into a contracting approach. Choose the delivery method and contract type based on scope definition, schedule, risk appetite and owner capability. Run a fair, transparent and documented tender process, and evaluate on value rather than price alone. In the exam, read the scenario clues, think about risk allocation, follow the process and choose the ethical, collaborative and compliant option.
Test mode:
PMI-CP - Procurement and Tendering Strategy Example Questions
Test your knowledge of Procurement and Tendering Strategy
Question 1
In a two-envelope tendering procedure, why are the technical and price proposals submitted and opened separately?
Question 2
In construction tendering, what does a pre-bid meeting combined with a site visit chiefly achieve for the owner?
Question 3
Tender instructions for a unit price earthworks package state that where a rate multiplied by its quantity differs from the extended amount, the rate governs and arithmetic errors will be corrected before ranking. Bidder B's submitted total is 4.85M. However, one item of 2,000 m³ at 150 per m³ is extended as 150,000. Bidder A's total is 4.95M and has no errors. What should the project manager do with Bidder B's tender?
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More Procurement and Tendering Strategy questions
15 questions (total)
Other Contract Lifecycle and Delivery Methods concepts
Advising Leadership on Delivery Method SelectionAlliancing and Collaborative ContractingClauses on Changes, Delays and Extensions of TimeCommunication Gaps from Contractual ArrangementsConstruction Management at Risk and Agency CMContract Administration During ExecutionContract Award and MobilizationContract Close-Out and Final AccountDesign-Bid-Build DeliveryDesign-Build and EPC DeliveryGuaranteed Maximum Price and Target CostKey Contract Clauses: Scope, Time and PaymentLean Integrated Project DeliveryLiquidated Damages, Indemnity and Liability ClausesLump Sum, Unit Price and Cost-Reimbursable PricingMulti-Party Agreements and Shared Risk and RewardPublic-Private Partnerships and ConcessionsRisk Apportionment Across Delivery MethodsRoles and Responsibilities by Contract StructureStandard Forms of Construction ContractSubcontracting and Supply Chain ContractsSupporting Leadership Through the Contract LifecycleTermination, Suspension and Force MajeureThe Contract Lifecycle from Discovery to Close-OutThe Integrated Form of Agreement (IFOA)